The price of gold stabilized near the level of $4,465 per ounce, after losses of nearly 2% in Tuesday’s session, while investors continue to monitor developments in the war related to Iran and its impact on energy markets and global inflation, according to “Bloomberg.”
Fears of disruption to oil supplies and the continued stalemate over reopening the Strait of Hormuz led to a broad sell-off in global bond markets, as long-term US Treasury bond yields rose to their highest levels since the 2007 global financial crisis.
US President Donald Trump’s threats to resume strikes against Iran, just one day after he announced the cancellation of a US attack, also contributed to increasing the state of anticipation within global markets. On the other hand, the US Senate, with a Republican majority, expressed opposition to expanding the scope of the war. Which added more blur to the scene.
Analysts believe that the rise in energy prices resulting from geopolitical tensions enhances the risks of inflation. Which may prompt the US Federal Reserve and other central banks to keep interest rates high for a longer period, instead of lowering them as markets had previously expected.
Gold is usually seen as a safe haven in times of crisis, but high interest rates limit its appeal, as it does not generate a financial return for investors.
Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that the markets are witnessing a clear state of anticipation, explaining that the weakness of investment flows into exchange-traded funds reflects investors’ waiting for clearer stimuli during the next stage.
In other metal markets, silver prices fell slightly after sharp losses in previous sessions, while platinum stabilized and palladium rose, coinciding with a limited rise in the US dollar index.
