Gold (XAUUSD) is trading higher on Tuesday as investors monitor the developments from the U.S.-Iran war. The precious metal is viewed as a safe-haven asset and tends to perform well during periods of escalated geopolitical tension.
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Forget margin or options. Here's how the pros trade QQQ“Any escalation involving Iran raises uncertainty around regional stability, energy markets and global trade routes, which tends to push investors toward defensive assets such as gold,” said Hiren Chandaria, Managing Director at Monetary Metals.
Gold Benefits from Geopolitical and Inflation Risks
The U.S. and Israel continue to launch attacks on Iran, while Iran has vowed to continue retaliating. On Monday night, President Trump warned that the country would be hit “TWENTY TIMES HARDER” if it impedes the flow of oil through the Strait of Hormuz.
Oil prices have surged during the past week, raising fears of inflation. However, higher inflation benefits gold given its status as a store of value. In addition, a weaker U.S. dollar generally pushes the metal higher because it takes more dollars to purchase gold.