Gold and geopolitical tension – war, in plain words – have a long history. World War II drove up the price of the yellow metal more than twice. The prolonged conflict in Vietnam pushed it up by more than half. The cost of gold went up by as much as 20% during the Gulf War (August 1990-February 1991) and the Iraq war (March 2003) stoked it by 50%.
Now that Israel and Iran, the third largest producer of crude oil, are raining missiles on one another, will it again raise gold prices, which have been on an upward swing since last year? While that question is spreading in many circles, data suggests that prices have jumped between October 1 and 3, suggesting the missiles are already hitting targets on B Street in India.
Gold price on October 3
According to rates of IBJA (India Bullion and Jewellers Association) prices of the precious metal were recorded at Rs 75,762 for 10 grams on October 3. This marked a rise of Rs 265 from October 1, when the price was at Rs 75,397. The rates announced by West Bengal Bullion Merchants & Jewellers Association, too, showed a rise of Rs 250 per 10 grams. Jewellers said, military conflicts almost always drive up the price of gold.
Goldman Sachs forecast
The Israel-Iran military confrontation comes against a backdrop of Goldman Sachs predicting prices of the metal could rise to a record $2,900/ounce (1 ounce = 28.34 gram) in early 2025. Earlier, it had predicted the metal to touch $2,700 around the same time. Currently, the price is at $2,655/ounce.
Rate cuts, demand and ETF
Explaining the reasons, the MNC financial services group said interest rate cuts in the world’s largest and second-largest economies (the US and China respectively), rising demand from different central banks of the world and stepped-up flows into ETFs.
“We reiterate our long gold recommendation due to the gradual boost from lower global interest rates, structurally higher central bank demand and gold’s hedging benefits against geopolitical, financial, and recessionary risks,” Goldman Sachs mentioned in a note recently.
While prices were marching northward anyway, the latest chapter of conflict between Israel and Iran could provide a further push. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
