Middle East tensions have increased the demand for gold as a safe haven investment. US-Iran tensions are leading to changes in the flow of capital, causing it to attract a significant increase in safe-haven demand while stocks and Bitcoin are under pressure.
Iran’s crude oil exports from Kharg Island have reportedly surged to about 20.1 million barrels from Feb. 15 to Feb. 20, nearly three times the level in January, as Tehran is preparing a preemptive hedge against possible supply disruptions. Meanwhile, a hawkish US stance on Iran’s nuclear program has led to unrest and therefore, investors are moving into low-risk assets.
Geopolitical Tensions
In the event of a direct military confrontation between the US and Iran, Bitunix analysts believe that gold prices could soar by about 15% within two weeks, reaching a $5,500- $5,800 per ounce range.
Meanwhile, safehaven asset purchases of the US dollar could put downward pressure on Bitcoin (BTC) pricing to about $64,000 to $65,000.
On the other hand, if inflation worries take precedence over the dollars strength, money could be moved into other hedges, thereby possibly pushing BTC to $69,000 levels where it would be more liquid. These examples clearly depict the effects of macro-risk factors on commodities of both the traditional and the digital variety.
Also Read: Bitcoin Gains Attention as Emirates NBD Weighs Investment in Digital Gold
Gold ETF Inflows
According to data from The Kobeissi Letter, Indian investors are quickly reallocating their capital into gold. Gold ETF inflows in India have hit around 250 billion rupees (approximately $2.7 billion), a record level that now goes beyond equity mutual fund inflows for the first time.
Since July,the demand has gone up by over 900%, whereas stock fund inflows have dropped by about 170 billion rupees (around $1.9 billion). Being the worlds second largest gold consumer and one of the biggest importers, India’s move is a big change in capital allocation, and it confirms it’s position as a preferred hedge.
Also Read: Gold Builds Momentum for Record High Run Toward $5,800
Bitcoin’s range
According to Glassnode, Bitcoin is still trading between $60,000 and $70,000 with only weak accumulation by whales and persistent ETF outflows. Nearly 9.2 million BTC are currently at a loss, and the 90- day realized profit, to, loss ratio has dropped below 1, which means that more holders are selling at a loss than those taking profits.
On the other hand, US-listed spot Bitcoin ETFs recovered on Wednesday, with inflows of around $506.5 million, the biggest since the beginning of February, thus opening the door to a tentative institutional interest.
