Against the backdrop of the still tense situation in the Middle East, international gold prices have just refreshed the worst bi-monthly decline in history. Traditional safe-haven assets by the dollar higher continued to suppress, the U.S. stock market stabilized back also let the attraction of gold faded. Looking ahead, when the U.S. and Iran reached a peace agreement, the Federal Reserve’s position and central bank purchasing continuity or become an important reference for the turning point of the gold price.
The U.S.-Israeli war with Iran has come to its 60th day. The conflict has disrupted global markets and triggered stagflation fears of “soaring inflation + economic slowdown”. Traders previously bet that global central banks may need to raise interest rates to curb high inflation, gold is a non-interest-bearing asset, high interest rates will increase its opportunity cost of ownership, the gold price suppression. In addition, market liquidity disturbances have also repeatedly triggered gold passive selling, further exacerbating the downtrend. Dow Jones market data show that the COMEX gold near-month contract in March-April cumulative plunge of 11.77%, the largest bi-monthly net decline on record.
Asset management organization BK Asset Management macro strategist Boris Schlossberg (Boris Schlossberg) said in an interview with China Business News, from the recent situation, geopolitical factors gradually become a “reverse” factor. “This depends largely on the change in the trend of the dollar, behind the liquidity factor in it.” He analyzed that if the U.S. and Iran are expected to reach a peace agreement, the gold price will rebound sharply; on the contrary, if the U.S. military launched a ground invasion, the gold price will fall in reverse.