There are several factors that can provoke a more significant increase in gold prices according to the head of the metals department.
First, the tactical positioning of gold during the tension in Afghanistan. Such events may lead to higher profits, revenue, or growth.
But if the tension does not spread to the region as a whole, gold is unlikely to see a significant growth amid the conflict.
"This impact should not cause a noticeable upsurge, similar to what was observed during the Arab Spring of 2011, or an escalation between the US/Iran and the US/North Korea."
Another factor is the domestic political consequences of US President Joe Biden's decision to withdraw, including the chances of passing an infrastructure law and other spending plans.
Any stimulus bill can also become a support for the growth of gold.
At the time when Biden made the decision to withdraw US troops, US stocks changed direction, and Treasury bonds reduced some gains. Gold continued its growth, but this was not caused by geopolitical sentiment, but by weaker data from the US dollar.
Market participants should also not forget that Afghanistan owns more than 700,000 ounces of gold. Thus, any significant sale of the yellow metal to receive cash can negatively affect the gold market.
If we take into account the past crises in Venezuela or Libya, there is no guarantee that the country's gold reserves are not decreasing to support cash. This is more likely to be a negative for the yellow metal.
Gold prices are currently determined by macro data, the dynamics of US dollar prices, and market expectations in connection with the Federal Reserve's announcement of tapering.
