Gold prices soared to an all-time high of US$2,450 an ounce on Monday, as a slowing inflation trend in the US increased optimism that the Federal Reserve will start easing monetary policy this year, while geopolitical tension in the Middle East is on the increase.
Spot gold rose 1.4% to hit $2,450.07 an ounce in Asia on Monday, surpassing a previous intraday record reached in April. But it eased to $2,440 later in the day. US gold futures soared 1.5% to $2,453.20.
Local gold trader Hua Seng Heng said bullion continued to rise sharply for a second week, after surging by more than $38 last Friday.
"The market became more confident the Fed would cut interest rates twice this year and China issued economic stimulus measures to stimulate the sluggish real estate sector by relaxing mortgage regulations," Hua Seng Heng said in a research note.
SPDR, the world's largest gold fund, bought an additional 6.62 tonnes of gold last week, it added.
The market is now keeping a close eye on the minutes of the Fed's last policy meeting, due on Wednesday, along with comments from a slew of Fed speakers this week about interest rate and inflation trends. Gold is known as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding gold.
Meanwhile, intensifying tensions in the Middle East are on the radar of investors after Iran's President Ebrahim Raisi and the nation's foreign minister died in a helicopter crash, according to Hua Seng Heng.
"But investing in a high-price situation is risky so we recommend speculating on the long futures contract in the short term," the gold trader noted.
Spot gold now has a support level of $2,380-$2,400 and resistance of $2,440-$2,460. Investors should cut their losses if the price falls below $2,400, it added.
Domestically, the price of gold increased by 350 baht early on Monday, bringing the price to 41,550 baht per baht (weight) as the baht appreciated to 36.07-36.09 baht to the dollar, against Friday's close of 36.21. Prices subsequently moved on 14 more occasions.
MTS Gold expects domestic gold prices to have short-term resistance at 41,700 baht per baht (weight) and 41,300 baht for support.