Middle East tensions, tariff jitters fuel gold's record rally

By Daksh Grover

(Reuters) - Gold prices rose 1% to hit a fresh record high on Tuesday, anchored above the $3,000/oz mark, as rising Middle East tensions and trade uncertainties due to U.S. President Donald Trump's tariff plans fueled demand for the safe-haven asset.

Spot gold hit a peak of $3,038.26 per ounce and by 12:00 p.m. ET (1600 GMT) was up 1% at $3,031.22 an ounce. Prices climbed above $3,000 for the first time on March 14.

U.S. gold futures gained 1.1% to $3,038.80.

Bullion, which had a stellar run last year, has maintained its momentum this year as well, gaining over 15% year-to-date and hitting record highs 14 times.

"The escalation in the Middle East tensions – as Israel launched military strikes on Hamas targets in Gaza, which threatens to undermine the ceasefire – has injected a new bid into gold," said Nicky Shiels, head of metals strategy at MKS PAMP SA.

Israeli airstrikes killed more than 400 people in Gaza, threatening a two-month ceasefire.

Meanwhile, Donald Trump has floated a series of U.S. tariff plans, including a flat 25% duty on steel and aluminum that came into effect in February, as well as reciprocal and sectoral tariffs that he said will be imposed on April 2.

Gold is traditionally regarded as a safe-haven investment during periods of economic or geopolitical instability.

Investors will now closely watch Trump's talks with Putin, where he is expected to push for a Ukraine ceasefire, as well as the Federal Reserve's monetary policy meeting on Wednesday.

Traders expect the Fed to keep interest rates unchanged on Wednesday, while they see nearly a 66% chance of a rate-cut in June, according to the CME Group's FedWatch Tool.

"If gold holds above $3,040, the next resistance level is projected at $3,080 as an extreme scenario," said Razan Hilal, market analyst at City Index.

Silver gained 0.5% to $33.99 an ounce, after hitting its highest level since late October.

"We may see stronger gains in silver over the next couple of weeks as it is playing catch-up," said Jim Wyckoff, senior analyst at Kitco Metals.

Platinum fell 0.1% to $998.85, and palladium added fell 0.3% to $962.00.

(Reporting by Daksh Grover in Bengaluru; Editing by Nick Zieminski and Mohammed Safi Shamsi)