Gold, traditionally seen as a safe haven asset in times of war, recently experienced a significant surge. Having been on a steady decline since late 2013, gold prices rose to above $1,400 an ounce, an increase of 7%, as the US and Iran stand on the cusp of outright conflict.
What does the prospect of war mean for gold?
The traditional view of gold is that it is a safe haven in times of economic or geopolitical uncertainty. With the prospect of conflict between major powers, investors flock to safe haven assets like gold, driving up prices. Therefore, it stands to reason that a full-blown war between the US and Iran will drive a further surge in gold prices.
However, it is important to note that this is not the only reason gold prices have risen. Other factors, such as the devaluation of the US dollar and the faltering stock markets, have also played a role in pushing up the price of gold.
At the same time, any potential war between the US and Iran could have implications for the prices of other commodities such as oil and lithium. The most obvious impact of a US-Iran conflict would be a spike in the price of oil, as the two countries are the second and third-largest producers of oil in the world. Furthermore, disruption to the oil supply from the region could cause global markets to suffer.
The price of lithium, a key component in batteries and electric vehicles, could also be impacted. The US-Iran conflict could potentially lead to the disruption of the lithium supply from the Middle East, resulting in higher prices.
Ultimately, war with Iran could have a significant impact on the prices of gold, oil, and lithium. Investors should be aware of the potential implications of a US-Iran conflict and ensure their portfolios are effectively diversified, as these commodities are likely to experience significant price fluctuations.