Gold Plummets as Renewed US-Iran Clashes Intensify War Concerns
Bullion prices extended their decline after fresh military strikes between the United States and Iran escalated tensions, jeopardizing efforts to end the conflict that has significantly roiled global markets. The latest clashes were triggered by retaliatory "self-defense strikes" carried out by American forces following an Iranian downing of a US helicopter off the coast of Oman.Gold fell as much as 1.2% to near $4,210 an ounce, adding to its previous slide of 1.6%. Iran’s state-run IRIB reported at least six explosions on Qeshm Island in the Strait of Hormuz following the incident.
Escalating Geopolitical Risks Threaten Fragile Truce
The ongoing confrontation between the two nations threatens a fragile ceasefire, raising fears that the near total closure of the Strait of Hormuz could be extended. This vital waterway is a crucial transit point for energy shipments moving from the Middle East to international markets.Iranian Foreign Minister Abbas Araghchi responded to the escalation via X, asserting that the country "will leave no attack or threat unanswered." These remarks underscore the heightened risk profile surrounding regional stability.
Market Headwinds Push Precious Metals Lower
The surge in oil prices presented a significant headwind for non-yielding precious metals. Brent crude benchmark slid 3% on Tuesday, yet oil's overall rebound fueled concerns regarding global inflation. This increased likelihood of central banks holding steady or raising interest rates puts pressure on gold and related commodities.Gold is currently about a fifth below its trading level prior to the outbreak of the Iran war at the end of February. Furthermore, the metal’s recent decline through its 200-day moving average has triggered additional selling, as this measure is closely watched by institutional investors.
Expert Viewpoints and Technical Support Levels
Suki Cooper, global head of commodities research at Standard Chartered Plc., stated that "We expect price action to become more vulnerable in the near term" given the prospect of rising interest rates. She noted that further slumps in bullion could expose gold to greater downside risk, especially for those holding gold-backed exchange-traded products.The next technical support level identified for gold is around $4,100 an ounce. While markets such as India are showing softness, China remains a bright spot for demand. Cooper added that the local premium in China is steady at below $10 an ounce.
Global Precious Metals Market Movement
Spot gold fell 0.9% to $4,223.82 an ounce in Singapore by 8:15 a.m. Silver also retreated, sliding 0.6% to $64.97 an ounce. Platinum and palladium followed the downward trend. The Bloomberg Dollar Spot Index, which gauges the US currency, remained little changed.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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