A few days after the tension in the Middle East escalated, the safe-haven appeal of gold remained undiminished, and the price of gold continued to hover near record highs.

Gold prices closed at a new high on Monday. The most active June gold futures contract rose 0.37% to close at $2,383 an ounce. At the same time, some Wall Street analysts believe that gold still has more room to rise.

Citigroup analysts wrote in a report released yesterday, “The recent rise in gold prices has been driven by geopolitical events.”

Over the weekend, Iran directly launched more than 300 drones and missiles at Israel. Although most of them were intercepted, market demand for a safe-haven asset such as gold has also increased due to the possibility of escalating tension in the Middle East.

Market observers are closely watching possible retaliation actions by the Jewish state, and Israel has vowed to “demand the price” from Iran.

Bartosz Sawicki, a market analyst at financial services firm Conotoxia FinTech, said Israel's major retaliation could lead to a wider conflict, triggering new purchases of gold, as well as rising oil prices and a stronger dollar.

As a hedging tool to hedge against inflation, gold often performs well in times of economic uncertainty because investors stay away from riskier assets such as stocks.

Gold prices hit an all-time high of $2448.80 per ounce in the intraday session on Friday. Since the beginning of this year, the price of gold has been rising due to a series of factors such as global central banks “absorbing gold”, geopolitical tension, and expectations that the Federal Reserve will cut interest rates. Since the beginning of the year, the price of gold has risen by more than 15%.

The price of gold is usually inversely related to the federal funds rate. As interest rates fall, gold will become more attractive compared to lower-yielding fixed income assets such as bonds.

Earlier, the higher-than-expected US CPI data for March delayed the market's “first drop” forecast for the Federal Reserve until September. Currently, the market expects the Fed to cut interest rates twice instead of three times.

Despite this, analysts are optimistic about the future of gold due to continued physical demand and its appeal as a geopolitical hedge.

Citi analysts led by Aakash Doshi, head of Citigroup's North American commodity research, said, “We expect the price of gold to reach $3,000 per ounce in the next 6-18 months.” Citi said their “price bottom line” for gold also rose from around $1,000 to $2,000 per ounce.

On Friday, Goldman Sachs said the gold market had entered an “unshakeable bull market” and raised the target price of gold from 2,300 US dollars per ounce to 2,700 US dollars by the end of this year.