Gold Hits New Highs After Short-Lived Profit Booking Amid Rising Israel-Iran Tensions

Gold prices touched another record high after a brief spell of profit-booking amidst escalating tensions between Israel and Iran. Both nations continue to exchange direct strikes, which has even led to a sharp rise in crude oil prices. On Monday, the yellow metal was priced at ₹1,01,078 on the Multi Commodity Exchange (MCX).

The demand for the safe-haven asset faltered last month as investors switched to profit-booking. "Gold traded in a narrow range near ₹99,800, down by ₹450, as profit booking was witnessed following reports of multiple potential trade deals between India-US, India-China, and US-Euro zones. This moderation in safe-haven demand led to a mild correction in Comex gold as well," said Jateen Trivedi, VP research analyst- commodity and currency, LKP Securities.

However, rising tensions in West Asia have once again increased risk-off sentiment among investors. Analysts expect the upward momentum in gold prices to continue as geopolitical risks remain elevated.

"...the underlying momentum is expected to remain positive as safe-haven bids remain firm amid escalation in the Israel-Iran war and trade tariff-related uncertainty," said Pranav Mer, Vice President, EBG - commodity and currency research, JM Financial Services Ltd.

A lot of uncertainty also remains high on the tariff front. While trade talks and bilateral trade agreements (BTA) continue, there has been little ray of hope for investors as the July 9 tariff deadline nears.

Key Triggers for Gold Price

The Federal Reserve's upcoming decision will play a key role in impacting the price of the yellow commodity. However, more than the interest rate move itself, investor attention will be focused on Fed Chair Jerome Powell's commentary and any development in trade talks.

"These factors are expected to keep gold prices highly volatile. Comex Gold is likely to trade in a range of $3,290 to $3,450, while MCX Gold could fluctuate between ₹97,000 to ₹1,02,000 in the near term," said Trivedi.