The Conflict in the Middle East Hampers Investment in Gold
Gold Investments Dip in Q1 Amid Middle East Tensions
Investments in gold fell in the first quarter due to tensions in the Middle East, which forced many investors to liquidate part of their assets to free up cash.
Capital Outflows Despite Record Highs
According to the World Gold Council, investment volumes decreased by 5%, despite record prices reached in January. Nevertheless, gold has maintained its status as a safe-haven asset amidst a weak dollar and uncertainties surrounding the economic policies of Donald Trump.
The report indicates that significant outflows recorded in March largely offset the inflows observed in January and February, particularly in gold-backed exchange-traded funds, especially in North America.
The Liquidity Quest at the Center of Decisions
Expert Juan Carlos Artigas notes that gold is often the first asset to be sold off during periods of tension due to its high liquidity and global acceptance.
A Geopolitical Climate Under Strain
This trend occurs against a backdrop of heightened regional tensions, marked by military escalations involving the United States, Israel, and Iran, as well as the closure of the Strait of Hormuz, a key artery for global energy trade.
These disruptions have led to a significant increase in energy prices and heightened market volatility, prompting investors to reassess their positions.
High Prices Weighing on Demand
While the value of gold purchases surged due to skyrocketing prices, demand in volume has decreased. The jewelry market has also been impacted due to high prices and logistical disruptions, with the Middle East serving as a major hub for gold trade.
