Gold Markets on Edge: Political Talks and ‘Trigger Mechanism’ Uncertainty Drive Prices
Tehran – As global gold prices climbed to $3,337 per ounce, domestic markets in Iran saw significant activity, with gold bullion reaching 7,624,000 tomans. The market’s immediate trajectory, however, is clouded by anticipation of high-stakes international diplomacy, according to a capital market expert.
Global Summits Dictate Market Sentiment
The financial world is closely monitoring a series of upcoming political meetings. Mojtaba Diba, a capital market analyst, stated that the global gold market is poised to react to the outcomes of discussions between international figures, including planned meetings between former U.S. President Trump and Russian President Putin, followed by Trump’s engagements with European leaders.
“The current market is in a state of suspension,” Diba commented. “Everyone is waiting to see what signals emerge from these meetings. If the current indicators persist, we could see a price correction for gold.”
Despite the potential for a short-term dip, Diba emphasized that the long-term technical and fundamental outlook for gold remains robustly bullish, with a potential medium-term target of $3,280. “The overall and long-term trend for gold is upward, and it will once again record new highs,” he asserted, suggesting any correction would be a temporary buying opportunity for investors.
The ‘Trigger Mechanism’ and Two Economic Scenarios
A central point of uncertainty for the Iranian market is the so-called ‘Trigger Mechanism.’ Diba explained that its potential activation remains speculative but would be a primary driver for the rial and domestic gold prices.
He outlined two distinct scenarios:
- Positive Agreement & Mechanism Suspension: Should a positive agreement be reached and the mechanism not activated, the analyst expects the U.S. dollar rate to stabilize between 85,000 to 87,000 tomans. A very favorable outcome could even see it fall to the 60,000-70,000 toman range. Coupled with a potential drop in global gold prices, this could push domestic gold bullion down to 6.8 or 7.2 million tomans.
- Activation of the Mechanism: Conversely, if the mechanism is activated, leading to the reinstatement of previous agreements, the analyst predicts the dollar could surge to between 95,000 and 100,000 tomans. In this scenario, domestic gold prices could rally sharply, reaching between 7.8 million and 8.4 million tomans.
Strategic Investment Advice for Uncertain Times
For citizens considering entering the gold and foreign currency markets, Diba advised a measured and strategic approach. He strongly cautioned against investing one’s entire portfolio, recommending instead a phased entry to mitigate risk.
His guidance differed based on investment horizons:
- Short-term investors were advised to exercise extreme caution due to prevailing market volatility.
- Long-term investors, however, were given a more bullish outlook. “For those with a long-term view, considering the government’s budget deficit, inflationary conditions in the second half of the year, and the high volume of money printing, we expect the price of gold and the dollar to maintain an upward trend, even if an agreement is realized,” Diba stated.
He concluded by differentiating between investment vehicles, noting that raw gold bullion may be a safer hedge against potential price drops, while gold coins could offer higher returns if inflation accelerates due to their added premium.
