Gold Prices Stabilize as Middle East Conflict Extends Into Fifth Week
Gold is poised for its first weekly advance since the onset of the Middle East conflict, as investors capitalized on lower prices to enter the market.
The precious metal traded near $4,490 per ounce during early trading hours, following a 2.7% increase in the previous session. While bargain hunters are beginning to appear after gold's most significant decline in years, worries persist that an extended war may prompt central banks to liquidate reserves or increase interest rates to control inflation.
As the conflict reached its one-month mark, representatives from Pakistan, Egypt, and Saudi Arabia convened over the weekend to explore diplomatic solutions. However, military actions continued unabated—missile strikes caused power outages in parts of Tehran, Iran-aligned Houthi militants from Yemen entered the fray, and additional U.S. forces deployed to the region. Iran also launched attacks on aluminum production facilities in Bahrain and the United Arab Emirates.
Despite a slight gain last week, gold has dropped approximately 15% since the war started, generally moving in correlation with equities and inversely with oil prices. Soaring energy costs have raised fears that the U.S. Federal Reserve may hike interest rates—a negative factor for non-interest-bearing gold—while Turkey's central bank disposed of roughly 60 tons of gold, valued over $8 billion, through sales and swaps during the initial fortnight of the conflict.
Substantial central bank acquisitions have supported gold's upward trend in recent years. Should other monetary authorities emulate Turkey's actions, the overall purchasing momentum could decelerate, challenging the prevailing view that central banks avoid selling gold.
Spot gold dipped 0.1% to $4,490.22 per ounce at 6:48 a.m. Singapore time. Silver decreased 1.6% to $68.62, while platinum and palladium also registered losses. The Bloomberg Dollar Spot Index, which tracks the U.S. currency, climbed 0.2% after rising 0.7% last week.
