Iran, USA, Africa & goldprice

Further US bombing attacks on Iran cause gold prices to plummet

The recent US attacks on Iran will weigh on gold markets through a series of ripple effects—rising oil prices, increasing inflation expectations, and a stronger dollar—said Onur Dashdemir, a former analyst at the Turkish central bank. Dashdemir cited three main factors for the current decline in gold prices: The reimposition of US sanctions against Iranian oil, as well as safety concerns for tankers transiting the Strait of Hormuz. The expectation that the US Federal Reserve will keep interest rates high, with rising inflation forecasts reinforcing this view. A simultaneous price drop in other precious metals such as silver, platinum, and palladium. The US attacks on Iran have impacted the price of gold, and the "safe haven" aspect is more complex. However, the situation in Africa is somewhat different. When geopolitical tensions escalate (for example, after attacks or retaliatory strikes), investors often flee to "safe" assets. Gold is traditionally considered such an asset: In times of uncertainty, demand rises, and the price rises. For example, the price of gold jumped sharply in February 2026 after the US and Israeli attacks on Iranian targets – from about $5,100 to $5,300 per ounce. However, there is also a counteracting effect. If oil prices rise as a result of an escalation (which often occurs when important shipping lanes like the Strait of Hormuz are threatened), investors' fears of inflation intensify. High inflation typically prompts central banks (including the US Federal Reserve) to raise interest rates. This creates a paradox: as expectations of interest rate hikes increase, gold ownership becomes less attractive because—unlike bonds or deposits—it does not generate interest income. In such a situation, pressure on gold can outweigh risk-driven demand, and the price falls. This is precisely what was observed in July 2026: following another wave of escalation, the price of gold fell for several days despite an initial rise. Africa itself is not a direct factor in this relationship between shocks and the price of gold. However, news reports or analyses sometimes elaborate on this theme, pointing to risks for the entire Middle East and adjacent regions (including parts of Africa). This indirectly amplifies the general geopolitical uncertainty in the markets. Africa is therefore not mentioned as the cause, but rather within the broader geographical context of the conflict, which influences the sentiment of global investors. The price of gold has a massive impact on the African continent, as Africa is among the world's leading gold producers (especially countries like Ghana, South Africa, Mali, Tanzania, and Burkina Faso). Since gold is both a major export commodity and a "safe haven" in times of crisis, price fluctuations affect entire economies. When the price of gold rises (boom scenario): A rising gold price brings significant economic advantages to financially strong gold-producing countries in the short and medium term, but also entails social risks. Higher gold prices mean massive foreign currency revenues (primarily US dollars) for exporting countries. This strengthens the trade balance and stabilizes national currencies. Governments collect significantly more taxes and royalties. Many African states use such periods of high gold prices to renegotiate contracts with international mining companies or to introduce progressive tax systems (such as Ghana, which links its contracts to the gold price) in order to secure a larger share of the profits. International mining companies invest billions in exploring for new deposits and building new mines (e.g., in Tanzania or Guinea). This creates jobs in the formal sector and injects money into local infrastructure (roads, energy supply). Many African central banks take the opportunity to diversify their own currency reserves by purchasing physical gold domestically and reducing their dependence on the US dollar. When gold becomes extremely valuable, informal and often illegal artisanal mining (“galamsey” in Ghana or “orpaillage” in West Africa) booms. The consequences are devastating environmental damage (mercury and cyanide poisoning of rivers, deforestation) and serious conflicts with criminal gangs or rebels who use these illegal mines for financing (e.g., in the Sahel). When the price of gold falls (crisis scenario): A falling gold price hits producing countries hard, especially those whose budgets depend heavily on raw material exports. Decreasing export revenues lead directly to budget deficits. Governments often have to cut planned infrastructure projects, social spending, or education budgets because of a lack of funds. When fewer dollars flow into the country through gold sales, local currencies come under pressure. A weaker national currency, in turn, makes imported goods (such as fuel and food) more expensive, which fuels domestic inflation. For the major mining companies, profit margins decrease. When prices fall below all-in sustaining costs, unprofitable mines are temporarily shut down or closed permanently. This leads to mass layoffs and economic depression in the affected mining regions. Capital for exploring new deposits dries up. Investors avoid high-risk projects in emerging markets, which slows the sector's long-term growth. While low prices reduce large investments, local people in the informal sector often do not stop mining. Lacking any real economic alternatives, artisanal miners continue to extract resources under even more dangerous and poorly paid conditions to ensure their survival. US attacks on Iran initially drive up the price of gold (demand for a "safe haven"). However, should this trigger a sharp rise in oil prices and inflation concerns, the pressure from interest rate expectations could outweigh the price increase and cause it to fall. Africa plays a secondary role in this context rather than being a primary cause. @sputnii Africa @goldprice.live.pk