Key takeaways:
- Investors are getting nervous (risk aversion) due to reports of Israeli missiles hitting Iran, so they’re buying gold (a safe investment) which is driving the price up.
- An Iranian news agency, Fars, reported explosions near the airport in Isfahan, a central city in Iran.
- A stronger US Dollar might slow down the increase in gold prices.
During Friday’s Asian session, the value of gold nearly reaches $2,410 per troy ounce. This valuable commodity, prized for its reliability in times of uncertainty, experiences a surge as worries about risk heighten in global financial markets following ABC News’ confirmation of Israeli missile attacks on an Iranian location, escalating tensions in the Middle East.
According to reports from Iran’s Fars News Agency, relayed by Reuters, locals in the vicinity of the central Isfahan airport reported hearing explosions. However, the cause of these explosions remains unknown, prompting ongoing investigations to determine the exact circumstances surrounding the incident.
Regarding the US Dollar, Federal Reserve (Fed) officials delivered more aggressive statements on Thursday, causing a spike in US Treasury yields and the value of the Greenback. This, in turn, dampened the upward trajectory of assets like Gold, which do not generate yield. The strengthened USD makes gold more costly for holders of other currencies.
Atlanta Fed President Raphael Bostic pointed out that US inflation is notably high and emphasized the necessity for the Fed to continue addressing it. Meanwhile, New York Fed President John Williams reaffirmed the Fed’s commitment to making decisions based on incoming data and indicated that he currently sees no immediate need to lower interest rates.