Gold Prices Fluctuate Amid Middle East Tensions; Banks Eye $5,000 Target by Year-End

International gold prices are experiencing volatility, trading around $4,500 per ounce. This fluctuation is driven by ongoing tensions in the Middle East, particularly sporadic clashes between the U.S. and Iran and uncertainty surrounding a potential framework agreement. The continued blockade of the Strait of Hormuz is also fueling expectations of interest rate hikes by year-end, further pressuring gold prices.

Despite the short-term downward pressure, major investment banks, including Goldman Sachs, Bank of America, UBS, Deutsche Bank, and JPMorgan Chase, maintain a positive outlook for gold. Their optimism is rooted in several factors: sustained buying by central banks, currency devaluation due to sovereign debt crises, and the ongoing demand for asset diversification. These institutions collectively anticipate gold prices could rebound to between $5,000 and $6,000 per ounce by the end of the year.

The primary variable influencing gold's trajectory remains the direction of interest rates. If the Strait of Hormuz remains impassable, persistently high oil prices could drive inflation, potentially forcing central banks to raise interest rates. As gold does not yield interest, rising rates increase the opportunity cost of holding the metal, which could lead to its sale. The research team at Yuanta S&P Gold ETF (00635U) advises investors to monitor the previous low point in late March (around $4,357 per ounce) for support. Given the unpredictable market information, the precious metals market is experiencing heightened volatility, and investors are cautioned to manage risk diligently by setting stop-profit and stop-loss points.