Gold Prices Experience Significant Fluctuations Amid Geopolitical Tensions
According to reliable sources from the Moroccan Federation of Goldsmiths, which encompasses various professional organizations within the jewelry sector, gold prices have witnessed notable volatility in recent days, particularly following the outbreak of conflict in the Middle East. The onset of war coinciding with the holy month of Ramadan has led to a decrease in demand for this precious metal in the Moroccan market, as consumers redirected their purchasing power towards fulfilling other essential needs associated with the festive season. These challenges have been compounded by a significant reduction in production, attributed to shortened working hours in production units and workshops, leading to a relative stagnation in supply and demand dynamics. It is anticipated that the situation will revert to normalcy in the upcoming weeks as market activities resume.
Global Gold Market Trends and Local Pricing Discrepancies
In discussing the global fluctuations in gold prices, it is noteworthy that the cost of gold has dropped significantly with the conflict in Iran entering its fourth week. The spot price of gold has fallen by approximately 15% since the onset of the conflict on February 28, and it is down around 22% from the record high observed in January. Idriss El Hazzaz, president of the Moroccan Federation of Goldsmiths, indicated that professionals in the sector are closely monitoring price movements, which hovered around $4,300 but have since risen to $4,500, stabilizing at approximately $4,430. This reflects an increase of $18 compared to the previous day, underscoring the ongoing instability in international markets under the current geopolitical conditions. Traditionally viewed as a hedge against inflation, gold's appeal has been tempered by expectations of sustained increases in interest rates due to rising energy prices, which exert pressure on its attractiveness as a non-yielding asset.
El Hazzaz also pointed out a discernible trend of investors opting to divest from gold stocks and redirect their capital towards the oil and energy sectors, motivated by the continuous price spikes in oil and its derivatives, which have been rising daily by rates between 8% and 15%. This shift reflects a change in risk management strategies among investors, who are now favoring higher-yielding assets in the current climate. It is expected that production workshops will resume normal operations following the Eid holiday, within a timeframe of one to two weeks, which will contribute to restoring balance to the market and likely lead to a stabilization of prices towards their normal levels by the end of next week.
El Hazzaz further addressed the issue of the pricing gap between international markets and the local market, highlighting that while international prices might reach 980 dirhams per gram, local prices remain elevated, fluctuating between 1,090 and 1,100 dirhams. This discrepancy of approximately 120 dirhams is primarily attributed to the influence of speculators and intermediaries within the national jewelry market, which prevents consumers from swiftly benefiting from potential declines in global prices.
Current market conditions have resulted in a significant slowdown in commercial activity, particularly in the gold sector, where many shops and units remain closed. It is anticipated that regular market operations will not resume until a week after the Eid celebrations. The post-Eid period has coincided with the travel of many artisans and traders, further contributing to a noticeable decline in production and demand. This absence of effective market activity has led to a fragmentation of prices, with different parties adopting varying pricing strategies due to the lack of a stable transaction base or unified reference point at this time.
Global analysts predict that sharp fluctuations in gold prices will persist in the near future, driven by increasing investor tendencies to mitigate risks amid escalating tensions with Iran, concerns about inflation, and diminishing expectations for interest rate cuts, all of which exert pressure on global economic growth prospects. Nevertheless, experts maintain that gold's role as a value preservation tool will endure over the long term.
As reported by hespress.com.
