ALBAWABA - Investors are keeping a close eye on the talks between the US and Iran, which are seen as a key driver for precious metals in the near future. This is making the global gold and silver markets more volatile.
Both gold and silver prices changed a lot today because of changes in risk mood. Markets were weighing the chance of a diplomatic breakthrough against the risk of more political tensions rising in the Middle East.
Analysts think that gold and silver prices will go down if Washington and Tehran reach a political or nuclear agreement that lowers tensions in the area. This is because people will not want to buy as many safe-haven assets.
Reuters says that any sign of a calming down in geopolitics usually makes investors less interested in gold, which is often used as a hedge during times of instability. Recent market data already shows strong correction moves. For example, gold has dropped more than 3% in the last few sessions, and silver has dropped even more as investors took profits.
Analysts in the market say that a deal could shift capital flows to riskier assets like stocks, which would make it easier for people to sell valuable metals.
Scenario Two: Demand for safe havens rises again
On the other hand, if talks between the US and Iran break down or if military action increases, gold and silver prices could rise again.
Investing.com and FXStreet both say that when there is political unrest in the Middle East, especially when there are threats to oil routes and regional security, people tend to buy more precious metals as a way to protect themselves. When things are like this, gold could quickly rise again to new highs, and silver would do the same.
Reuters also says that markets are still very sensitive to political statements and military events, especially since the U.S. military is still stationed in the area. This means that there are still strong chances for prices to go up.
The market is still tense.
Gold and silver seem to be in a "wait-and-see" mode for now, following the news from diplomatic sources. Investors are weighing the hope for a peaceful resolution against the risk of a larger conflict in the area. This means that precious metals are very sensitive to changes in the relationship between the United States and Iran.
