Gold Prices Weaken Slightly Despite Rising Middle East Tensions
Gold prices experienced a slight decline in Asian trading on Monday, despite the increasing geopolitical tensions in the Middle East. The precious metal had risen by 0.8% before finally weakening to around $3,361 per ounce. This decline occurred after the United States joined Israel in launching attacks on three major nuclear facilities in Iran, triggering fears of retaliation from Tehran. The news also pushed the dollar stronger and oil prices jumped, which triggered concerns about global inflation.
Although in theory geopolitical tensions could encourage investors to switch to safe haven assets such as gold, in reality the market still looks hesitant. According to ANZ analyst Daniel Hynes, market players are not yet fully convinced that this conflict will develop into a large-scale global tension. Concerns that rising energy prices could make the Federal Reserve reluctant to cut interest rates also held back gold, because this metal does not provide returns like other assets when interest rates are high.
In addition, Iran's attitude, which has not yet made a major response to the attack, has also reduced market pressure. The country is also expected to be cautious about triggering a spike in oil prices that could hurt its trade relations with partners such as China. Gold is now just over $140 off its record high in April, making investors wary of adding to their long positions. Meanwhile, silver prices have been steady, while platinum and palladium have been seen weakening.
Source: Newsmaker
