Gold prices were above the $4,400 mark on Friday as energy markets continue to undergo disruption—particularly the oil market, which is suffering a supply crunch as facilities in the Middle East produce less crude.
At the time of writing, WTI and Brent oil indexes were trading at $97.43 and $110.3, up by 3.12% and 2.17% respectively. The majority of oil indexes are now rallying again after dipping below the $100 mark.
“Historical analysis reveals gold tends to fall whenever a crisis event unfolds like such as war or other forms of market distress,” said Century Financial’s Chief Investment Officer Vijay Valecha.
“Despite its safe-haven appeal, investors tend to book gold positions to cover losses in other asset classes when there is a risk-off sentiment. However, once the dust settles and concrete signs of the situation stabilizing emerge, then gold tends to rebound sharply,”
Gold—which has typically been seen as a safe haven—has exhibited volatile behaviour over the past week, keeping investors wary of the metals market.
Trump said 10 oil tankers were allowed to pass through Strait of Hormuz
U.S. President Donald Trump has extended the deadline to strike Iran’s power plants to April 7th if they don’t open the Strait of Hormuz. Iran allowed 10 tankers to pass through the Strait of Hormuz, a relatively small amount compared to the average of more than 100 vessels that used to pass daily, an act which Trump has referred to as a gesture of goodwill.
Shipping companies are now adjusting their routes to avoid disruption for their vessels, avoiding the Strait entirely and moving shipments away from Jebel Ali and Khalifa, two key Gulf-based ports.
“By extending the deadline, any kind of concrete resolution regarding the reopening of the Strait of Hormuz is simply getting delayed. This, in turn, extends the uncertainty weighing on markets and the broader global economy. Tehran has a string of conditions for ending the conflict, one of which is a guarantee that the US and Israel won’t resume their attacks,” said Valecha.