Fears of new US-Iran conflict fuel record-breaking surge in gold price

Gold prices have continued to surge higher on Wednesday after more news out of the United States continues to weigh on investors sentiment.

The price of the precious metal rallied to a new record high briefly touching $US5602 (AU$7901), before sliding back to $US5,542 an ounce.

Gold’s rally continues to defy market expectations, having recently only passed the $US5000 ($AU7219)an ounce mark on Tuesday.

IG market analyst Tony Sycamore said investors continue to buy the safe haven asset due to geopolitical tensions.

“Market sentiment soured on reports that President Trump is weighing a new round of military strikes against Iran, following the failure of preliminary discussions between Washington and Tehran regarding the country’s nuclear program and ballistic capabilities,” he said.

In a statement Mr Trump warned time is running out for a fair and equitable deal, threatening the US would ramp up attacks on Iran.

“As I told Iran once before, MAKE A DEAL! They didn’t, and there was “Operation Midnight Hammer”, a major destruction of Iran. The next attack will be far worse! Don’t make that happen again,” Trump wrote on Truth Social.

The price of gold had already rallied throughout the day on news the US Federal Reserve would hold the official cash rate.

Meanwhile the greenback slumped to its lowest level in four years.

GlobalX ETFs investment strategist Justin Lin says despite the huge run up in gold prices, investors are likely to continue buying the metal as it has some similarities to the 1970s, when the price of gold exploded from US$35 ($AU50) an ounce to $US800 ($1128) over the decade.

“Like the 1970s, today’s environment reflects geopolitical tensions and a growing loss of confidence in currency stability,” he told NewsWire.

“However, inflation dynamics are also far less volatile today than they were then, largely due to the absence of an oil-price shock of the magnitude seen in that period.

“Instead, the current backdrop points to a broader structural shift in the global order, driving a sustained need for asset diversification.”