An employee arranges one kilogram gold bars at the Perth Mint Refinery in Perth, Australia, on Aug. 9, 2018.

Gold surged to its highest level in nearly six years on Monday as the prospects of lower Federal Reserve rates and lingering geopolitical tensions between the U.S. and Iran made the precious metal more attractive to traders.

Gold futures for August delivery traded as high as $1,424.90 per ounce, their highest mark since Aug. 28, 2013. The precious metal settled more than 1% higher at $1,418.20.

"The geopolitical tensions and an expectation of a more dovish Fed pushed investors to increase their gold exposure," Mark Keenan, global commodities specialist at Societe Generale, said in a note. "Gold continues to be extremely overbought with short positions staying at their yearly lows and long positions climbing to their highest level since February 2018."

"This extreme positioning is likely to linger as [Fed Chair] Jerome Powell reassured markets about the Fed's capacity and willingness to support economic expansion with rate cuts and other unconventional management tools," Keenan said.

The precious metal is up more than 9% for the year and is on track for its biggest one-year gain since 2017, when it rose 13.7%.

Investors piled into gold after the Fed said last week it would "act as appropriate" to keep the current economic expansion going. The Fed also said inflation was running below its 2% target. Those comments increased the odds of the Fed cutting rates in July, weakening the dollar.

"It's a much more favorable backdrop. It seems to be a combination of trade tensions attracting flight to safety and concerns about global easing of monetary policy," said Suki Cooper, precious metals analyst at Standard Chartered Bank. She said gold could hit technical resistance at $1,425 and she expects it to reach a high of $1,440 this year. Cooper added gold had been struggling to break through resistance at $1360 and $1365, and got a boost when the Fed looked set to move toward rate cuts.