The recent missile attack by Iran on Israel has sent shockwaves through the global market, with investors closely watching the unfolding conflict and its potential impact on gold prices. The attack, which followed Israeli strikes on Hezbollah in Lebanon, marks a significant escalation in tensions between the two countries and their regional allies.
This heightened geopolitical uncertainty has led to increased demand for safe haven assets like gold. Investors typically flock to gold during times of economic and political instability, seeking a safe haven for their investments. A full-blown war between Israel and Iran would likely exacerbate market volatility, with investors seeking to protect their portfolios from potential losses.
The conflict could also disrupt oil supplies, further driving up energy prices and fueling inflation. Gold is often seen as a hedge against inflation, meaning it tends to hold its value or even appreciate during periods of rising prices. This could further boost demand for gold, pushing prices even higher.
However, while gold prices did rise following Iran’s attack on Tuesday, the gains were relatively muted. This suggests that investors may have already priced in the possibility of war and are not overly surprised by the recent events. Additionally, some investors remain skeptical about the likelihood of the conflict escalating further, pointing to previous instances of tensions in the Middle East that ultimately did not lead to full-scale war.
Despite the uncertainty surrounding the conflict, gold has enjoyed a remarkable year, trading near an all-time high. The commodity has seen a 28% increase in value in 2024 and a whopping 44.17% gain over the past 12 months. This suggests that investors remain bullish on gold’s long-term prospects, particularly in a world marked by increasing geopolitical instability and rising inflation.
The SPDR Gold Trust (GLD), iShares Gold Trust (IAU), and SPDR Gold MiniShares Trust (GLDM) are among the largest gold ETFs, allowing investors to gain exposure to the gold market without physically owning the precious metal. As the situation between Iran and Israel unfolds, these ETFs are likely to be closely watched by market participants, providing valuable insights into the potential direction of gold prices.
