At the time of writing, gold is trading near $4,067 an ounce, down around 1.5% today, while silver is close to $58.06, down approximately 2.75%.
Today’s market reaction is once again being driven by what the conflict could mean for inflation and interest rates. Oil has climbed towards $100 a barrel following attacks on two Saudi tankers in the Red Sea, adding a second threatened shipping route alongside the Strait of Hormuz.
Higher energy prices are increasing inflation concerns, pushing US Treasury yields and the dollar higher. The ten-year Treasury yield moved above 4.7% today, placing renewed pressure on gold and silver despite continuing demand for safe havens.
The European Central Bank has also left rates unchanged at 2.25%, warning that the full inflationary impact of the energy shock has yet to emerge. In the US, jobless claims fell to 187,000, reinforcing expectations that the Federal Reserve will not be in a hurry to lower rates.
For now, higher yields and a stronger dollar are outweighing gold’s short-term geopolitical support. Silver is under greater pressure because it is also exposed to concerns about economic growth and industrial demand.
But while traders focus on today’s price action, China is making a potentially significant change to the structure of its gold market.
ICBC, China’s largest bank and the world’s largest by assets, is ending individual customer access to precious-metals trading through the Shanghai Gold Exchange. Several other major Chinese banks have already done the same.
This is not a ban on owning physical gold. Chinese households can still buy bullion, use gold accumulation plans and own gold ETFs.
Instead, China appears to be drawing a clearer line between gold as a savings and monetary asset, and gold as a leveraged retail trade.
In our latest GoldCore TV episode, we look at why these trading channels are being closed and how the decision fits alongside China’s continued gold accumulation, control of physical bullion flows and expansion of its vaulting, clearing and international settlement infrastructure.
Is this simply about protecting retail investors from volatility, or is China laying another piece of a much longer-term monetary strategy?
Buy Gold Coins
Buy gold coins and bars and store them in the safest vaults in Switzerland, London or Singapore with GoldCore.
Learn why Switzerland remains a safe-haven jurisdiction for owning precious metals. Access Our Most Popular Guide, the Essential Guide to Storing Gold in Switzerland here.
Receive Our Award Winning Market Updates In Your Inbox – Sign Up Here
