Gold News

Gold Price $80 Below Pre-Iran Attack Peak as Crude Oil Falls

GOLD PRICES steadied $80 below last week's all-time high on Monday, while oil prices fell from a 6-week high as world leaders urged "de-escalation" in Middle East tensions following Iran's direct attack on Israel at the weekend, writes Atsuko Whitehouse at BullionVault.
Having fixed at $2401 per Troy on Friday afternoon in London's bullion market and then peaked $30 higher before dropping $100, spot gold in US Dollar terms rebounded 1.2% at the start of Asian trade Monday before retracing half that rally around $2350.
Wholesale bullion in the spot market also rallied after Friday's late drop from UK Pounds and Euro gold price all-time records, trading at £1890 and €2214 having fixed just before the weekend at £1929 and €2257 respectively.
Oil prices popped but quickly lost the earlier gain, with Brent crude down 0.7% and US West Texas Intermediate (WTI) off nearly 0.8% on Monday after both reached a 6-month high last Friday.
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"An attack was largely priced in over the days leading up to it," says Warren Patterson, head of commodities strategy at ING, of today's falling oil prices this morning.
"Also the limited damage and the fact that there was no loss of life means that maybe Israel's response will be more measured," Patterson continued.
US crude oil futures vs. Dollar price of gold. Source: BullionVault
Iran's attack – the first assault on Israel by a foreign nation in over 3 decades, and made in retaliation for the 1st April Israeli strike on Iran's consulate in Syria – involved more than 300 drones and missiles on Saturday night.
But having been well flagged by Tehran in advance, it caused limited damage according to the Israeli government thanks to military support from allies the US, UK, France and Jordan.
"Escalating tension in the Middle East is a clear driver [of Friday's surge] but the developments over the weekend, with the Iranian air strike on Israel, had only a limited effect on the precious metals markets," says a gold-price and precious metals note from Rhona O'Connell at brokerage Stone X Group Inc.
"This is in part because the metals were already well overbought, partly because geopolitics have been driving the move anyway, and partly because the intense diplomatic manoeuvring is giving rise to hope that the situation can be contained."
United Nations Secretary-General Antonio Guterres condemned Iran's attack at an emergency meeting of the UN Security Council on Sunday, but joined US President Biden and fellow Israel allies the UK and France in calling not to further escalate tensions with reprisals against Iran.
Following Tehran's attack, the Iranian mission to the UN said "the matter can be deemed concluded" but warned it will strike again with greater force if Israel or the US retaliate.
"The US will continue to help Israel defend itself, but does not want war," said John Kirby, the White House's top national security spokesperson, on Sunday.
The Dollar index – a measure of the US currency's value versus its major peers – held steady at 5-month highs after recording a weekly gain of 1.7%, its biggest since September 2022. 
Ten-year US Treasury bond yields – a benchmark rate for government as well as many finance and commercial borrowing costs – meantime edged higher to 4.60% per annum, the highest level since mid-November.
European shares inched up while US equities futures signalled a rebound from Friday's fall. 
The price of silver, which finds nearly 60% of its annual demand from industrial uses, rose 1.8% from Friday's close to $28.58 per ounce after touching a 3-year high of $29.79 in the last session.
Aluminium climbed as much as 9.4% on the London Metal Exchange (LME) while nickel rose 2.7% and copper edged up to fresh 2-year highs after the UK and US introduced sanctions effectively banning new supplies from major miner Russia over Moscow's continued invasion of and assault on Ukraine. 
Newly-cast Russian gold and silver bars were banned by the London Bullion Market Association in March 2022, while the London Platinum and Palladium Market suspended government-owned Russian refiners from its Good Delivery and Sponge Accreditation lists the following month.

Atsuko Whitehouse is the Head of the Japanese Market at BullionVault and the Editor of Japanese GoldNews.

See all articles by Atsuko Whitehouse here.

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