By Lee Kyung-min – The Korea Times – Gettyimage
The price of gold, both here and abroad has become volatile due to lingering uncertainty stemming from the U.S.-Iran dispute.
According to the Korea International Finance Center, the price of gold for delivery in February stopped a 10-day winning streak, Wednesday (local time), retreating 0.9 percent or $14.10 to end at $1,560.20.
The setback came a day after the price hit a fresh high due to traders flocking to the safe asset following an escalation of tensions between the U.S. and Iran.
The surge followed news reports that Iran launched more than a dozen missiles at two Iraqi bases housing U.S. troops in what the U.S. Pentagon believed was retaliation for the American airstrike that killed a top Iranian general in the Iraqi capital of Baghdad Jan. 3 (local time).
However, the price turned downward after U.S. President Donald Trump made no mention of taking military action against Iran and called for peace, dispelling concerns of an impending war.
The price of gold also retreated in Korea, losing more than 1,500 won per gram. On Wednesday, the price hit an intraday high of 60,010 won per gram.
While the dominant view is that gains driven by geopolitical tensions alone tend to be short-lived, the lingering possibility of the tension developing into a full-fledged war could keep prices elevated for a while,” according to an economist.
“The possible start of a war is the biggest uncertainty there,” Park Chong-hoon, chief economist at Standard Chartered Bank Korea said.
“Gold is considered a safe asset favored by investors in times of uncertainty. This was the case when the U.S. trade feud took a turn for the worse last year,” he added.
Given the situation developed quickly and with no guarantee of tensions dying down anytime soon, concerns will remain heightened, he added.
“Initially the U.S, government said the strike was an attempt to de-escalate tensions with Iran, but Tehran has since vowed revenge for the killing. It’s all about the reactions exchanged. There is no certainty about that,” he said.