Gold News

Gold and Silver Jump Again But ETF Investing Still Missing as Iran Urges Opec Embargo of Israel

GOLD and SILVER ETF funds continue to see no new investing inflows despite prices leaping even as longer-term interest rates rise to yet more new multi-year highs in the bond market amid fears that the Israel-Hamas war risks spreading across the Middle East.
The Islamist regime in Iran today called on fellow Opec oil-cartel states to embargo energy supplies to Israel – visited today by US President Joe Biden – as the government of Benjamin Netanyahu continued bombarding Gaza following the Hamas terrorists' slaughter of at least 1,400 people 11 days ago.
Crude oil slipped after Tehran's call, down almost $2 per barrel of Brent from an earlier 2-week high, but holding 7.0% higher from  the eve of Hamas' atrocities in southern Israel. It has lost $15 a barrel the week before that.
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Global stock markets also edged back Wednesday, trading 1.4% higher from the Friday night before Hamas' 7 October attack.
Gold bullion has gained 7.6% in US Dollar terms over that time – peaking above $1960 per Troy ounce on Wednesday, an 11-week high – and silver has jumped 9.8%, also starting from what were multi-month lows to reach $23.30 at lunchtime in London.
"While the Israel-Hamas war will drive haven flows towards gold," says a note from Australasian bank ANZ, "our positive view for the price hinges on the Fed rate cycle nearing an end.
"This will result in a retreating US yield, reducing the opportunity cost of gold."
But US bond yields jumped again today even as gold and silver rose, having already set fresh multi-year highs on short, medium and also longer-term Treasury debt on Tuesday.
Table of short, medium and long-dated US Treasury debt rates and yields. Source: BullionVault
Gold investment flows were meantime muted on Tuesday, with users of BullionVault – now caring for $4.0 billion of gold, silver, platinum and palladium for over 100,000 private investors worldwide – turning net sellers once more on the latest price jump.
The giant GLD gold-backed ETF remained unchanged in size, with the trust fund continuing to show its smallest number of shares in issue since mid-August 2019.
No.2 gold ETF the IAU has also seen no investor inflows since the Hamas atrocities in Israel, remaining at its smallest size since April 2020.
Silver's giant SLV ETF meanwhile shrank by 0.7% as bullion prices jumped towards today's 3-week highs, ending last night with the fewest shares in issue since the start of this month. 
"As soon as there are clearer signs of an imminent recession in the US," reckons Germany's Commerzbank, "[starting] roughly next spring, rate cut speculation should increase and lend greater buoyancy to gold.
"[But] the [gold price] recovery is likely to begin at a lower level, not to mention later than we had previously predicted."
"Russia and China spy an opportunity to distract and discredit America," claims The Economist magazine in London, after Moscow's Foreign Minister Sergei Lavrov met his Chinese counterpart Wang Yi for talks in Beijing on Monday.
Wanting to exploit anything to distract from his war on Ukraine, according to Washington-based Foreign Policy magazine, " Putin is helping Hamas to hurt the West," says the Washington Post, because the Russian president "benefits from global chaos...[aiming for] the destruction of the current international system," according to a Washington think-tank.
"Iran is [also] positioning itself to benefit from the Israel-Gaza conflict," says a column in London's Financial Times. But while "A cottage industry of well-funded think-tank experts has been pushing the United States and its allies toward war with Iran for decades," says former US Deputy Assistant Secretary of Defense for the Middle East Andrew Exum, writing in The Atlantic magazine, "we should be cautious about careless rhetoric."
Even so, "should the war turn into a conventional conflict, and should Iran, say, threaten the sea lanes around the Arabian Peninsula, its navy will find itself at the bottom of the Persian Gulf in a matter of days," he adds.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver, platinum and palladium market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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