Gold Jumps 2%: What's Happening in the Middle East?
Gold prices surged sharply at the start of the week, fueled by escalating wars in the Middle East that have sent global markets into "alert mode" and investors rushing to safe haven assets.
In early Asian trading, gold rose more than 2% to around US$5,390/oz, extending last week's gain of more than 3%. This rise occurred as geopolitical tensions escalated and safe-haven sentiment returned to prominence.
The conflict escalated after the US and Israel launched attacks on Iran, and Tehran retaliated with a wave of missiles that reportedly hit targets in several countries. The situation further rocked the market after reports claimed that Iranian Supreme Leader Ayatollah Ali Khamenei was killed on the first day of the attacks.
Bloomberg believes that this gold rally was also driven by long-standing factors: global geopolitical tensions, changes in US foreign policy, and a trend of investors reducing exposure to bonds and currencies, while central bank purchases remained high.
The impact was felt across assets: oil surged the most in four years amid concerns about supply disruptions, including the issue of the "effective closure" of the Strait of Hormuz, while the US dollar index also strengthened. This indicates that the market is again considering energy supply risks and geopolitical risks as key themes.
Besides gold, other precious metals also rose: silver strengthened, followed by platinum and palladium. At the same time, the strengthening dollar did not halt the commodity rally—indicating that investors view hard assets as a hedge against extreme conditions like the current one.
Key Points:
- Gold rose sharply as investors "fled to safety" as the Middle East war escalated.
- Gold prices briefly broke through around US$5,390/oz at the start of the Asian session.
- The US-Israeli attack on Iran and Iran's missile retaliation increased regional geopolitical risks.
- Commodity markets also experienced volatility: oil surged sharply due to supply/Strait of Hormuz concerns.
- Silver, platinum, and palladium also strengthened; the dollar rose but did not "kill" the commodity rally. (asd)
Source: Newsmaker.id
