While the planet discovered the new escalation in the conflict between Israel and Palestine, the price of gold already reflected investors' search for refuge. Once again, the precious metal serves as a safeguard in the midst of international turbulence. The dollar, the international reference currency, has also served as a refuge.
After the first movements of the weekend or Monday, calmer days have followed. "The world has learned to deal with this type of conflict, the same thing can happen here," comments Antonio Castelo, iBroker analyst. The best example is the war in Ukraine, which after the strong reactions of the first days has now been put on the back burner.
Gold and security go hand in hand. The story has been similar in this case. Switching to gold "is the first reaction to cover yourself in a situation like this. When a conflict breaks out, everyone wants gold. A tangible asset, with value per se, instead of papers such as currencies or bonds," he explains. Something that gives more conviction and with real support.
These days the metal is moving around $1,860 per ounce after the jump from 1,830 on Friday, prior to the Hamas attack. On Monday it reached $1,862, up 2%. Yesterday it moderated and barely moved. Despite the turbulence, it is far from its highs above $2,000 that it reached with the outbreak of the war in Ukraine in March of last year, or with the turbulence in American banking in May.
In any case, his role has been repeated once again. "It has always been a refuge value because of the value it has, it has been understood that way throughout the centuries. When things go wrong, it happens," Castelo insists. The Hamas attack and the Israeli response represent "what we usually call an event with a geopolitical impact on the financial markets," explains Javier Méndez Llera, from the Spanish Institute of Analysts. "As is usual in these cases, the first reactions of the markets are the flight to quality, a movement towards safe haven assets such as gold and the dollar."
The markets were already coming from the uncertainty of rate increases by central banks and prices. "The yellow metal has come under enormous pressure in recent weeks, as investors became increasingly uncertain about the inflation and interest rate environment and yields soared," Craig Erlam noted in an analysis. , by Oanda. Just a month ago the value of an ounce stood at $1,920, a level that would lead to a revaluation of more than 3%.
The dollar also received the first movements of those seeking refuge. "Regarding the strength of the dollar, with the debt that the US has, perhaps we should think about it differently..." Castelo warns. The Dollar index, which follows the strength of the dollar against a basket of international currencies - including the euro - but looking at the last week, it has not moved much. On Monday it rose, which indicates a revaluation in the comparison, but barely tenths, and yesterday it remained flat. Thus, it remains at 105.5 points.
For now the conflict is limited to Israel, Palestine and part of Lebanon. An escalation could reignite the search for safety. "If we went to something more global, a third of oil production would be lost (limitations in transportation, production drops), that would be a drama, no one is interested in what happens," says Castelo. A direct involvement of Iran, Saudi Arabia... It is not the central scenario. "No one is interested in a generalization of the conflict," she reiterates.
