Gold surges on rising Mideast tensions
Gold prices nailed another historic peak on Tuesday and oil extended gains over rising tensions in the Middle East. The haven precious metal advanced as high as US$2,266.85 an ounce in morning London deals to extend its blistering record-breaking run, driven also by the prospect of interest-rate cuts in the coming months. Oil gained more ground as Iran warned its arch foe Israel that it will retaliate for a deadly air strike on its consular annex building in Syria's capital Damascus, raising fears of a spillover of the Gaza war across the region. "Gold's historic safe haven appeal has been re-ignited by geopolitical factors which includes the current crisis in the Middle East," said Rabobank analyst Jane Foley. "The possibility of an escalation in the Middle East given current headlines regarding Iran's accusations of Israeli strike on a consulate building in Syria are underpinning gold prices today," she added. Gold prices are rising as traders anticipate interest-rate cuts by the European Central Bank, Bank of England and the US Federal Reserve in June as inflation is slowing, analysts said. "When interest rates fall, gold becomes relatively more attractive compared with fixed income assets such as bonds, which offer weaker returns in a lower interest rate environment," said City Index analyst Matthew Weller. (AFP)