ROSS NORMAN : Bombs drop … dollar drops … gold drops (???)
Gold market observers and commentators must surely be accustomed to the perverse nature of the gold price action. In our view neither the fundamental data nor the traditional drivers seem to adequately explain nor account for its unusual price behaviour for the last 18 months or so. The recent bunker buster bombing of Iranian nuclear facilities by B2 bombers on Sunday morning (conveniently when markets were closed), risking escalation to a nuclear war has seen gold prices fall by 2%. So much for a safe-haven. What to make of this ???
Firstly there is something a little odd about this 48 hour “war” … I am left with a sense that we have just been treated to some geopolitical theatre. Cynic that I am. Trump needed to look tough (backing down was becoming predictable to the point of comical) … Israel needed appeasement and an endorsement from its big brother … they warn Iran in advance of bombing … nasty material moved in advance (allegedly) … bombs drop … Iran retaliates on a bomb-for-bomb basis with attack on US base in Qatar (which had been freshly evacuated) … Iran gets a hug from China/Russia ... peace declared even before the dust has settled … everyone is a winner ... Trump has saved us from Middle East nuclear armageddon ... Tehran Times declares a significant victory, honour restored … US media delighted … oil continues to flow … the rest of us … non-plussed. What the hell just happened ?
The short answer is I just don't know, but it all seems very odd to me. I think we have just been played.
It is tempting to explain major world events through the lens of the gold price, but I am not so sure it is currently reflecting that sort of macro reality just now anyway.
Two explantions ... either a.) gold continues to dance to the different beat of another drum as we have maintained ... and this 'non-performance' by gold would only reinforce that view ... or b.) gold has also become cynical like me.
Ross Norman
ross@metalsdaily.com
www.metalsdaily.com