Oil Price Surge Trumps Geopolitical Haven Demand for Gold
The escalation between the US and Iran has pushed Brent crude above $100 a barrel for the first time in months, but gold is sliding instead of surging. This rare contradiction is rewriting the traditional safe-haven playbook, driven by the Federal Reserve's rate trajectory.
The precious metal changed hands at $4,053.40 an ounce on Thursday, down 1.97% on the day. Despite a twelfth consecutive night of US airstrikes against Iranian targets and Houthi attacks on Saudi tankers in the Red Sea, investors are not flocking to gold.
The surge in energy prices is stoking inflation expectations, reinforcing bets that the Fed will keep rates elevated or even deliver another hike at its July 30 meeting. The intraday range shows a market torn between two forces: gold touched a two-week high of $4,165.87 earlier in the session before reversing course.
The chart picture has deteriorated noticeably, with gold sitting more than 10% below its 200-day moving average and drifting away from the 50-day average of $4,252.94. Analysts are divided on whether the current level represents a buying opportunity or a prelude to deeper losses.