Gold prices could break through the US$1,600 threshold if US-Iran geopolitical tensions flare up again, with future gains dependent on the conflict's outcome, gold traders say.
Teerapong Nawawattanasub, managing director of YLG Bullion International, said gold prices surged past $1,600 per ounce for the first time in seven years earlier last week before falling to around $1,550 as US President Donald Trump refrained from retaliating against Iran after Tehran launched missile strikes on US military bases in Iraq.
Iran's move came after a US drone strike in Baghdad killed Iranian general Qassem Soleimani.
Since the situation remains full of uncertainty, gold prices still face an upside gain, with a rally foreseen when geopolitical conflicts flare up again, Mr Teerapong said.
Despite prevailing tensions, the US dollar's value remains firm because investors see it as a safe-haven asset.
"YLG expects gold to have a resistance price threshold at around $1,650 an ounce this year," Mr Teerapong said.
Globlex Securities vice-president Nuttawut Wongyaowarak said gold price movements this year are forecast to move in a range of $1,450-$1,650 per ounce.
If the situation between Iran and the US eases, gold prices are expected to decline to $1,500-1,520 an ounce, Mr Nuttawut said.
Based on statistics in 2019, gold prices rose by 4% during the 2019 Iranian downing of an American drone, with a 2% surge seen when a Saudi Arabian oil depot was attacked by drones linked to Yemen's Houthi rebels, said Piyapat Patarapuvadol, vice-president for research at Yuanta Securities.
But the present US-Iran conflict is much more intense than previous occurrences, therefore gold still has an upside of 1-2%, Mr Piyapat said.
If the conflict develops into regional warfare, this would be the main factor in a stronger gold price rally this time around, he said.
As gold prices still have upside potential, investors are advised to make gold 3-5% of their portfolio, said Ekpawin Suntarapichard, vice-president of SCB Securities.
The ratio could rise to 8-10% in the event of heightened geopolitical tensions, he said.
Gold also would help investors hedge against inflation caused by rising oil prices and the resulting elevated goods prices, Mr Ekpawin said.