Gold Rebounds After Falling to Its Lowest Level of the Year

The global gold price, after falling to its lowest level of the year, has managed to rebound. This recovery was influenced by expectations of a peace agreement between the United States and Iran. However, some forecasts suggest that downward pressure on gold could persist in the long term. This is because the Iran war has driven up international oil prices and heightened concerns over inflation, dampening expectations of a U.S. interest rate cut. Additionally, with anticipation growing for a mega initial public offering (IPO) by SpaceX and public listings by leading artificial intelligence (AI) companies such as OpenAI and Anthropic, there are observations that investor funds could shift from gold to riskier assets.

AFP Yonhap News

As of 10:10 a.m. on June 12, international gold futures were trading at $4,228.30, up $114.30 (2.78%) from the previous trading day. This increase is attributed to the possibility of a peace agreement between the U.S. and Iran. U.S. President Donald Trump announced that he had called off planned airstrikes on Iran and could sign a memorandum of understanding (MOU) to end the conflict. International gold prices hit an all-time high earlier this year, surpassing $5,500 per ounce. However, following the Iran war, prices continued to decline, reaching a yearly low of $4,046.20 the previous day.

While gold has succeeded in rebounding, many analysts believe it will be difficult for the upward trend to continue over the long term. This is largely due to the challenging economic conditions currently surrounding gold. First, the diminished likelihood of a base interest rate cut is a burden. The Iran war has caused a sharp rise in international oil prices, intensifying inflationary pressures. As a result, the market is even considering the possibility of a U.S. rate hike. Since gold does not pay interest or dividends, its investment appeal diminishes as interest rates rise.

Peter Kinsella, head of investment services at UBP, told the Financial Times (FT), "Following the Iran crisis, investors started reducing portfolio risk," adding, "Investors are selling gold to cover margin calls on their other non-yielding assets." He further explained, "When investors reduce their exposure to risk assets, selling gold becomes inevitable."

There are also projections that the planned IPOs of major tech companies—including SpaceX, OpenAI, and Anthropic—could put further pressure on gold prices. Large-scale IPOs could absorb market liquidity, causing funds to flow out of gold. Tom Price, an analyst at Panmure Liberum, stated, "With investors seeking the next opportunity to capitalize on an upward trend, the SpaceX IPO could weigh on gold prices," adding, "Gold is currently underperforming, and investors are looking for the next major investment destination, which is SpaceX."

This content was produced with the assistance of AI translation services.