Gold Spot Price News: Gold Tumbles as Iran-Israel Tensions Ease

 

Gold Tumbles as Iran-Israel Tensions Ease | Gold Spot Price News Update

Gold prices are down this morning. Despite hitting a fresh all time high of over $2,400 per troy oz in early April, gold now flirts with its biggest price crash in two years. Although gold’s most significant market-mover this year has been rumors of interest rate cuts, today’s correction is a reaction to easing tensions in the Middle East. Of particular interest to investors is the conflict between Israel and Iran, which kicked off when Iran launched targeted missile strikes at Israel on April 13. 

Iran’s attack was a response to the April 1 Israeli strike on the Iranian consulate in Syria. Iranian forces launched 170 drones, 120 missiles, and 30 cruise missiles at Israel, the Center for Strategic and International Studies reports. The aggressive response provoked fears of all-out war between the two countries, which would be disastrous for both regional and global stability. As a safe haven asset, gold thrived in the high-stress environment that ensued as markets braced for renewed conflict between two formidable Middle Eastern countries. 

GOLD RISES 1% IN ISRAEL-IRAN AFTERMATH

The prices of precious metals increased on Monday with gold popping 1% following the latest events in the Middle East that took place over the weekend.

The commotion caused by Iran’s attack on Israel’s territory seemingly increased…

— *Walter Bloomberg (@DeItaone) April 14, 2024

As demand for safe haven gold spiked and prices climbed, investors looked to Israel’s retaliation for cues as to whether or not the scuffle would translate into a prolonged war. News came early morning April 19, when Israel launched limited strikes against Iran. Initial reports suggested that the Israeli response to Iran’s bombardment was a far cry from the escalation that some security analysts feared. U.S. officials urged Israel to consider a “careful and strategic” retaliation, Axios reports. 

Israel seems to have taken the hint, offering a generally proportional military response to Iran’s aggression. 

The reactions of both Israel and Iran suggest that the two countries are aiming for de-escalation. Israel’s retaliatory strike was limited in nature, striking a small number of military targets in Central Iran and doing minimal damage to key strategic targets. Iran state media quickly downplayed the attack. Foreign Minister Hossein Amirabdollahian obfuscated on the source of the attack, likely minimizing Israel’s involvement to avoid public demand for further escalation. Amirabdollahian had this to say about the Israeli strike:  

They’re … more like toys that our children play with, not drones […] It has not been proved to us that there is a connection between these and Israel.

Leaders in the international community also rushed to downplay Israel’s retaliation, urging a calm de-escalation between Israel and Iran. 

Gold Price Analysis – Where is Gold Heading? 

Easing tensions in the Middle Ease are behind gold’s latest dip. A muted retaliatory response from Israel de-escalated the threat of large-scale conflicts, prompting cautious investors to pull out of gold, which is traditionally a safe haven asset. Pressure from the international community to avoid all-out war helped ensure a measured Israeli response to Iran’s April 13 air strikes. For now, smart money is on falling gold prices while a renewed large-power war in the Middle East appears unlikely. 

This might not be the case for long. The New York Times reports that Israel’s muted response could signal a larger conflict yet to come. While the strike itself was limited, security analysts say it wasn’t without purpose. Israel’s strike sent a strong message to Iran: Israel is capable of crippling Iran’s military infrastructure. The retaliatory attack illustrates Israel’s capacity to bypass air defense systems in Tehran, making it more of a veiled threat than a declaration of war. 

Gold prices are historically correlated with geopolitical uncertainty. Signs of escalation in global pressure-points could send gold prices back into the stratosphere – but only time will tell if geopolitical conditions will spell another big bull run for gold. 

Complicating the equation is ongoing speculation concerning federal interest rates. Fed Reserve Chair Jerome Powell said that three rate cuts are likely in 2024, and speculation about when lower rates are coming drove much of gold’s March 2024 run. The Federal Reserve is slated to meet on April 30 – May 1, and speculation leading up to this meeting should have a massive effect on gold’s spot price. 

Gold prices have officially crossed above $2,300 for the first time in history.

Since February 14th, gold is up an incredible $300/oz or 15% in less than 2 months.

Even as 3 interest rate cuts have been removed from market forecasts, gold is pushing higher.

Geopolitical… pic.twitter.com/6LK9meQJIU

— The Kobeissi Letter (@KobeissiLetter) April 4, 2024

So what can we expect from gold in the rest of April? Anticipate volatility as investors grapple with mixed signals from the Fed and uncertain global geopolitical tensions in three key areas. Escalation in the Russia-Ukrainian war, Israel-Gaza war, or in the Iran-Israel conflict could be major market-movers for all precious metals – including gold.