War Wakes Gold Up

October 25, 2023

by Alasdair MacLeod Gold Money

This week, a firmer trend in gold continued as markets realised the seriousness of the deteriorating situation in the Middle East. In European trade this morning, gold traded at $1979, up $46 from last Friday’s close and up $160 from the October 6 low. Silver was less responsive at $22.95, up a modest 25 cents from last Friday’s close.

Open interest in gold remains remarkably low, as our next chart shows.

[…] This is possibly the most bullish chart we can show. It illustrates the very low level of speculative and hedging interest in gold, both of which can be expected to increase materially as the conflict in Israel evolves. Central to the problem, of course, is oil. Any attempt by the US and her NATO allies to intervene increases the likelihood of Iran closing off Hormuz at a time when western oil reserves are depleted. And according to StanChart, oil demand now exceeds pre-covid pandemic levels.