Israeli Army Launches Air Strikes in Lebanon
The Israeli army recently launched a series of new air strikes across Lebanon, including Beirut’s suburbs. This action was in response to the targeting of Hezbollah’s al-Qard al-Hassan financial institution’s offices, as reported by the local news agency Aljazeera.
Lebanon’s National News Agency confirmed that Israeli warplanes conducted at least nine attacks within an hour, specifically targeting the association’s branches in Hayy al Sellum, Borj al Barajneh, and Ghobeiry in the southern suburb of Beirut.
Market Reaction to the Events
As news of the air strikes broke, the financial markets responded with fluctuations in certain assets. At the time of press, the XAU/USD pair, representing the price of gold in US dollars, was up by 0.09% on the day, reaching $2,722.
Gold FAQs
Why is Gold Considered a Safe-Haven Asset?
- Gold has historically been used as a store of value and medium of exchange.
- It is perceived as a safe-haven asset, meaning that it is a valuable investment during times of uncertainty.
- Gold also acts as a hedge against inflation and depreciating currencies due to its intrinsic value.
Who Holds the Most Gold Reserves?
- Central banks are the largest holders of gold reserves.
- They diversify their reserves by buying gold to strengthen their currency and economy.
- In 2022, central banks added 1,136 tonnes of gold worth $70 billion to their reserves, the highest yearly purchase on record.
How Does Gold Price Correlate with Other Assets?
- Gold has an inverse correlation with the US Dollar and US Treasuries, major reserve assets.
- During times of dollar depreciation, gold prices tend to rise, making it an attractive diversification option.
- Gold is also inversely correlated with risk assets, with its price influenced by market sentiment.
What Factors Influence the Price of Gold?
- Geopolitical instability and economic recession fears can drive up the price of gold as investors seek safe-haven assets.
- Gold prices are affected by interest rates, with lower rates generally boosting gold prices.
- The US Dollar’s strength or weakness also impacts gold prices, as gold is priced in dollars (XAU/USD).
Analysis of the Situation
The Israeli army’s air strikes in Lebanon have not only raised geopolitical tensions but also affected financial markets, particularly the price of gold. Gold, known for its safe-haven status, saw a slight increase in value following the events. As investors and central banks navigate through uncertain times, the demand for gold as a reliable asset may continue to rise.