While the global energy markets are expected to see significant spikes as tensions between Iran and the U.S. grow due to the possibility of a military conflict, other markets have seen price hikes as well. One of them is the world of precious metals, and more specifically, gold. Prices for the yellow metal have been sent flying to their highest point seen since 2013.
Gold prices have broken the $1,500 price barrier, something that hasn’t happened since September of this year, and have shot up to $1,565.95 per ounce as of Monday, a high not seen in over seven years. While previous geopolitical incidents, such as the Iranian-associated tanker attacks earlier this year as well as the incident with Saudi’s oil fields, sent prices for gold surging, this most recent incident with the assassination of a top Iranian general has sent gold prices surging more than any other incident for the past year.
At the same time, the ongoing U.S.-China trade issues have also helped gold prices, although the recent conclusion of the first phase of the agreement has helped ease these concerns a little. While these worries are abating, however, concerns surrounding Iran seem to have filled their place.
“The move that we’ve seen in the past few days is clearly related to the escalation in the Middle East,” said Norbert Rucker, head of economics at Swiss private bank Julius Baer according to The Wall Street Journal. “The attack sent some tremors that were felt beyond the oil market itself and resulted in a flight to safety, which is exactly what we’ve seen in the gold market.”
Gold bulls have long promised that prices for the precious metal would skyrocket in the coming years. However, their main arguments tend to lean towards the looming possibility of an economic downturn, as indicators such as the inverted yield curve seemed to suggest that a recession is on the horizon. While America has remained in a bull market for a long time, it’s not so clear now whether or not 2020 will be the year the economy slows down, especially since stock markets are hitting new highs.
What gold bulls likely didn’t expect, however, was this drastic escalation in tensions between the U.S. and Iran. Prices for gold have gone up for the ninth consecutive day now, which happens to be the longest upward streak for the precious metal since January 5th, 2018. In that case, however, what sent prices for gold surging was a weak dollar, which was making gold cheaper to buy for overseas buyers.
Other markets, such as oil, have hit a near 22-month month high recently as well due to the fears, something which was to be expected. Other precious metals, such as silver and platinum, have gone up as well, as they often do in correlation with gold prices. Palladium prices are also reaching new highs, now sitting at $1,834.80 per ounce. The situation with palladium is a little bit different, since as a sister metal to platinum, it’s used heavily in the production of electric car batteries.
