Commodity Roundup: Israel-Iran conflict adds to gold’s safe-haven appeal

3 weeks ago

0 2 minutes read

stack of shiny gold bars on financial gold price graph 3d illustration — monsitj/iStock via Getty Images

Gold prices (XAUUSD:CUR) ticked higher on Monday, after hitting another record high in the previous session, buoyed by a weaker dollar and safe-haven demand from increased tensions in the Middle East, after Iran attacked Israel over the weekend.

Bullion hit an all-time high of $2,431.29 per ounce on Friday, clocking its longest streak of weekly gains in over a year, and has advanced about 14% so far this year.

ANZ expects gold to trade near $2,500/oz and silver to move above $31/oz by the end of 2024. Investment demand for gold and silver is likely to pick-up amid heightened geopolitical tensions and prospects of easing monetary cycle, and this could lead to silver outperforming gold in 2024, the brokerage said. A higher valuation of gold enhances the investment appeal of silver, with a softer dollar (DXY) further making Greenback-priced commodities cheaper for holders of other currencies.

On the economic data front, investors await U.S. retail sales data, with focus also on a slew of Federal Reserve speakers on the docket this week, with comments from Chair Jerome Powell on Tuesday coming under the spotlight.

Turning to energy commodities, oil prices fell more than 1%, with Brent (CO1:COM) trading below $90 a barrel, though some analysts said that was because the risk of what Iran called retaliation had already been priced in last week and as traders wait to see if worries of a wider war actually precipitate.

As Iran currently pumps a little over 3 million barrels per day (bpd) of crude oil as a major producer within the Organization of the Petroleum Exporting Countries (OPEC), supply risks include more strictly enforced oil sanctions and that an Israeli response could involve targeting Iran’s energy infrastructure, ING said in a note.

“If prices were to rally significantly on the back of supply losses, one would imagine that the group would look to bring some of this spare capacity back onto the market. OPEC will not want to see prices going too high given the risk of demand destruction,” analysts Warren Patterson, and Ewa Manthey said.

Elsewhere, the London Metal Exchange banned delivery of new Russian metal following sanctions imposed by the US and UK for Russia’s invasion of Ukraine. No Russian metal produced from April 13 onwards will be eligible for delivery to the LME, or to the Chicago Mercantile Exchange (CME).

Recent Commodity Price Movements and A look At Some ETFs