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Gold Eyes Best Quarter in over Eight Years

A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
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Gold Eyes Best Quarter in over Eight Years

A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)

Gold halted its record run on Friday but remained on track for its best quarter since 2016 after a rally catalysed by an outsized US Federal Reserve interest rate cut, while markets braced themselves for a crucial inflation report due later in the day.

Spot gold was down 0.1% at $2,666.50 per ounce as of 1115 GMT, below the all-time peak of $2,685.42 hit in the previous session. It is heading for its best quarter since the first three months of 2016.

US gold futures fell 0.2% to $2,688.90, Reuters reported.

"The market at this point in time has priced in all the good news and there's also some hesitancy from fresh buyers to get involved at these record high levels," said Ole Hansen, head of commodity strategy at Saxo Bank.

Bullion has risen 29% so far this year, hitting successive record peaks after last week's half-percentage-point cut by the Federal Reserve and the stimulus measures announced by China earlier this week.

Silver prices surged, tracking bullion's strong performance, though some analysts warn that the rally may fade.

"Overall, industrial demand is still supportive for silver. But we need to have a stronger economic performance in China as well as in other developed countries," said ANZ commodity strategist Soni Kumari.

The surge in silver prices is more a spillover impact from gold, Kumari said.

Spot silver eased 0.1% to $31.98 per ounce, after hitting its highest since December 2012 at $32.71 on Thursday. It is set for a third straight week of gains.

"I do believe silver will continue to outperform gold. But as we all know, wherever gold goes, silver tends to go, but faster," Hansen added.

Both gold and silver serve as safe-haven investments, but the latter has more industrial applications, so tends to underperform during recessions and outperform when economies expand.

Inflows into gold exchange-traded funds, particularly from Western investors, are set to rise in coming months, adding yet more positive stimulus for already record high bullion prices. Some banks expect gold to rise towards $3,000.

In other metals, platinum was up 0.5% at $1,012.40 but palladium fell nearly 1.5% to $1,031.75.

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Economists Warn of Global Trade Risks from Israel-Iran Conflict

Rescue workers at site hit by Israeli airstrikes in Tehran (Reuters)
Rescue workers at site hit by Israeli airstrikes in Tehran (Reuters)
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Economists Warn of Global Trade Risks from Israel-Iran Conflict

Rescue workers at site hit by Israeli airstrikes in Tehran (Reuters)
Rescue workers at site hit by Israeli airstrikes in Tehran (Reuters)

Economic experts have warned that a protracted conflict between Israel and Iran could have far-reaching repercussions on the global economy, driving up energy prices and disrupting key sectors including aviation, insurance, trade, and maritime navigation.

 

Speaking to Asharq Al-Awsat, Saudi Shura Council member Fadl Al-Buainain said the ongoing military confrontation is already impacting global energy markets, with oil prices spiking to multi-month highs in the immediate aftermath of the outbreak.

 

He warned that continued Iranian threats to close the strategic Strait of Hormuz could further fuel the surge in energy prices. “Such an act would be hostile, not only to Gulf nations but also to global consumers, compounding the challenges already facing the world economy”, Al-Buainain said.

 

He stressed that the energy sector is particularly vulnerable to military escalations. “Any disruption to oil production or exports from major producers could send oil and gas prices skyrocketing, with direct consequences for global economic stability”, he said.

 

While current military actions have had limited impact on output and exports, Al-Buainain cautioned that any direct strikes on energy infrastructure could push oil prices above $100 per barrel, depending on how badly global supply chains are hit.

 

The conflict has already disrupted international flight routes and increased operational costs for airlines, he said, while surging risk premiums have driven up insurance costs across the region. Maritime trade and shipping lanes are also at risk of direct disruption.

 

Al-Buainain noted that the fallout will vary across the region. He pointed out that Saudi Arabia, thanks to its strategic location and Red Sea ports, is better positioned to maintain the flow of trade. The kingdom also benefits from pipelines that transport oil from the east to the west, partially shielding its exports from Gulf disruptions.

 

He described energy as the “real engine” of the global economy and said it, along with foreign trade, will bear the brunt of the economic impact. "But the human cost and developmental setbacks caused by war are far worse”, he added.

 

Al-Buainain warned that prospects for a swift diplomatic resolution are diminishing. “Starting wars is easier than ending them,” he said, adding that an Iranian move to shut down Hormuz, while difficult in practice, could spark a direct confrontation with global powers, particularly the United States. “If American interests are attacked, Washington could be drawn into the conflict, which risks expanding beyond control”.

 

Khaled Ramadan, head of the Cairo-based International Center for Strategic Studies, said Israel’s strikes on Iranian energy infrastructure, including the Abadan refinery, which has a capacity of 700,000 barrels per day, could severely reduce oil and gas supplies if the conflict drags on.

 

He told Asharq Al-Awsat that Brent crude had already risen 8–13% following the escalation, crossing $78 per barrel. “Should the Strait of Hormuz be closed, we could see oil prices surge to record levels”, he warned.

 

Ramadan said the conflict could also disrupt global supply chains, especially through Hormuz, affecting non-oil goods such as electronics and food. Shipping and insurance costs would rise, leading to higher consumer prices and a slowdown in global trade.

 

Food staples such as wheat and corn, along with petrochemicals, garments, electronics, auto parts, and pharmaceuticals are all likely to see price increases, he said, citing higher energy and transport costs as well as declining market confidence.

 

Ramadan added that the economic fallout includes rising inflation, weakening currencies, and a drop in investment — particularly in tourism and tech.

 

“The Iranian rial and Israeli shekel have already hit their lowest levels this year,” he noted, adding that the war could reshape global energy alliances, with Europe increasingly seeking alternative suppliers.