$4,690 per ounce · $80… Gold and silver spot prices surge in tandem amid Middle East war risk

Gold and silver spot prices are simultaneously strengthening under the risk of war… Gold is at $4,690 per ounce

On the 11th (local time), international gold spot prices remained high around $4,690 per ounce. Silver spot prices reported at $80.20 per ounce, continuing the strong trend along with gold. On that day, both gold and silver were interpreted as being in a high volatility range, due to the intertwined effects of war, currency, and policy variables triggering safe-haven asset preferences and raw material supply concerns.

Gold is typically favored as a store of value during increased uncertainty in financial markets, possessing strong safe-haven asset attributes; while silver is both a precious metal and classified as an asset with high industrial demand for solar panels, electronics, and electrical components. The current trend is interpreted as: the demand for safe-haven assets driven by expanding geopolitical risks, along with silver’s strategic value as a key mineral and industrial demand expectations, both becoming factors in price formation.

The gold ETF listed on the New York stock market—the SPDR Gold Trust (GLD)—and the silver ETF—the iShares Silver Trust (SLV)—are representative listed index funds tracking gold and silver spot prices respectively, with their daily price movements indirectly reflecting investors’ risk appetite and safe-haven sentiment. As recent spot prices remain high, the prices of GLD and SLV also follow the spot trend closely, showing a pattern where safe-haven asset preference and raw material investment demand are intertwined and reflected in prices.

The preemptive strikes by the US and Israel against Iran have led to a full escalation of Middle East conflicts, with concerns over the blockade of the Strait of Hormuz highlighting this. The Strait of Hormuz is a critical chokepoint for global oil transportation; fears of a blockade could stimulate energy prices and inflation anxieties, transmitting through the reinforcement of safe-haven asset preferences. Analyses point out that Iran has shifted from a comprehensive blockade stance to a selective blockade, and the US has also signaled efforts to avoid long-term war, with the market still discussing war pathways and scope as main variables.

Pre-existing global central bank purchases of gold, Russia’s increased holdings of silver, and Turkey’s record-breaking gold purchases have also contributed to the price formation environment. Meanwhile, the US government has expanded the list of critical minerals to include silver and is discussing price floors for key minerals under Section 232 of the Trade Expansion Act, creating an environment where physical gold and silver markets, as well as related ETFs like GLD and SLV, may incorporate policy risk premiums.

The US dollar index surged from 96 to 99 due to war impacts, while Federal Reserve monetary policy has become more complex due to inflationary pressures from Middle East conflicts and rising oil prices. Usually, gold and silver face price pressures when the dollar strengthens, but this time, the safe-haven demand combined with central bank and government strategic reserve discussions has led to both spot and ETF prices showing defensive buying and profit-taking intertwined.

In South Korea, there has been criticism from the political sphere regarding the Bank of Korea’s gold purchases resulting in valuation losses, with ongoing discussions about the central bank’s gold reserve strategy. As gold and silver prices fluctuate near historic highs, various interpretations exist about how central bank reserve policies and political and policy debates will influence future market sentiment.

Currently, the gold and silver markets are in a complex situation where war, inflation, critical mineral policies, and central bank buying trends are acting simultaneously, showing a mix of defensive features and cautious sentiment. Given the sensitivity of these assets to interest rates, the dollar, and political and geopolitical issues, short-term volatility may increase, with market participants closely monitoring actual war developments, policy decisions, and monetary policy signals.