Gold Prices are Dropping as Tensions Between Israel and Iran Calm

The Israeli government’s offensive in Gaza has killed more than 34,00 people and created a humanitarian crisis.

SEATTLE (Scrap Monster): With tensions between Iran and Israel simmering, gold prices took a dip following a five-week rally.

Prices of the precious metal fell as much as 2.72%, trading at a low of $2,326.81 per ounce on Monday, as fears of an escalating conflict between the two nations appeared to have been abated by dialed-back responses after Iran and Israel exchanged attacks earlier this month.

Despite what appears to be the beginning of a downward trend, gold prices remain elevated, up roughly 13% from the beginning of 2024 and up almost 18% in the last 12 months.

On Sunday, Iran’s Supreme Leader Ali Khamenei said the country’s military “demonstrated its power” after launching more than 300 missiles and drones at Israel on April 13, Reuters reported, citing the country’s official news agency. The attack was a direct response to Israel’s suspected attack on Iran’s embassy in Damascus, Syria on April 1 that killed two Iranian generals.

Tehran also said it had no plans to retaliate after explosions were heard in Isfahan, a city in central Iran, early on Friday, in what was suspected to have been another Israeli attack.

Iran and Israel have had a historically rocky relationship, with tensions threatening to spill over since the start of the war between Israel and Hamas war on Oct. 7, when the Iran-backed militant group carried out an attack that killed 1,200 people in Israel. The Israeli government’s offensive in Gaza has killed more than 34,00 people and created a humanitarian crisis.

As Israel and Iran appeared ready to rein in tensions in hopes of averting an escalation of conflict in the Middle East, commodity prices are continuing to respond to the changing—and increasingly volatile—geopolitical situation.

Like gold, oil prices have been significantly affected by the ongoing conflict. Brent crude futures, an international benchmark, traded at $86.95 a barrel on Monday—well below some analysts’ fears of $100 per barrel, in what appears to be a stabilization of prices.

“There’s uncertainty in the oil prices. I think the biggest risk now is an escalation in oil prices, because then we get into a re-inflationary environment,” Lou Basenese, a strategist at Public Ventures LLC, told Quartz last week.

Courtesy: www.qz.com

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