The world is now awaiting Israel's response. While it initially appears that Israel is poised to retaliate, there may still be an opportunity to avoid further escalation.
The Israel-Hamas conflict remains unresolved, and now, Iran's assault could potentially expand the war's scope. The Middle East, being a major oil export region, faces the risk of rising oil prices if the conflict escalates. Such a situation could reroute trade, incurring higher costs. This would likely make inflation more persistent and deter the Federal Reserve from cutting interest rates.
Whatever the reason, gold has certainly regained its luster, and investors are taking notice. A Wall Street Journal article mentioned that gold bars have become popular at Costco, where stock frequently sells out. According to a Wells Fargo report, Costco has been making $100-200 million per month from selling these gold bars. Besides purchasing physical gold, an accessible option for investors is to invest in gold ETFs, such as the SPDR Gold Trust (GLD) or iShares Gold Trust (IAU).
The next alternative to consider is investing in gold miners. There are several indicators to examine when assessing these companies.
In fact, gold prices have reached historical highs, peaking at $2,431. Typically, a strengthening USD negatively impacts gold prices, as fewer dollars are needed to purchase the same amount of gold. However, the market is forward-looking and may have already priced in the anticipation of rate cuts and a weakening USD in the future. Additionally, increasing geopolitical risks and unrest in the Middle East may have further boosted this doomsday asset class.
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