Rising tensions in the Middle East are pushing investors toward safe-haven assets, with gold demand climbing as investors flee equities and crypto markets.
On Wednesday, reports revealed that Iran has sharply increased crude oil exports, with shipments from Kharg Island reaching 20.1 million barrels between Feb. 15 and Friday, about three times January’s level, as a preemptive supply release and a hedge against possible disruption if tensions with the United States escalate.
At the same time, increasingly hawkish US rhetoric regarding Iran’s nuclear program has raised expectations of confrontation, according to Bitunix analysts. “In the event of a direct US–Iran military conflict, gold could rise by roughly 15% within two weeks on safe-haven demand, targeting a range of $5,500-$5,800 per ounce,” the analysts wrote in a note shared with Cointelegraph.
Crypto markets also remain sensitive to the macro forces, the analysts said, noting that safe-haven flows into the US dollar could pressure Bitcoin ($BTC) prices toward the $64,000-$65,000 zone. On the other hand, if inflation concerns dominate over dollar strength, capital could rotate into alternative hedges and push $BTC toward $69,000 liquidity levels, Bitunix analysts said.
Related: Bitcoin Vs. Gold: ‘Better Opportunity to Buy’ $BTC Than 2017
Uncertainty drives flight to safety
That rotation into safe-haven assets is already visible in investor behavior. Data shared by The Kobeissi Letter on Thursday showed Indian investors are rapidly reallocating capital into gold. Gold ETF inflows in India have climbed to about 250 billion rupees ($2.7 billion), an all-time high, surpassing equity mutual fund inflows for the first time.
The increased inflows into gold products come amid a decline in equity allocations, with gold ETF demand rising more than 900% since July as stock-fund inflows dropped by around $1.9 billion, according to The Kobeissi Letter.
Indian investors turn to gold ETFs. Source: The Kobeissi Letter
“As the world’s 2nd-largest gold consumer and one of its biggest importers, India’s shift toward gold ETFs marks a fundamental change in how its investors are allocating their capital,” the analyst said.
Gold is currently trading at about $5,172 per ounce, slightly down on the day. However, over the past week, prices have risen by $219 (4.4%).
Gold price over the past week. Source: GoldPrice
Weak demand keeps Bitcoin range-bound
While gold is pulling in defensive flows, onchain data indicates crypto conviction is still limited. In a recent report, Glassnode said that Bitcoin has continued trading between $60,000 and $70,000 with weak whale accumulation and persistent ETF outflows.
Related: Gold at $5,300 Splits Strategies at Tether and Coinbase
The report also revealed that nearly 9.2 million $BTC are currently held at a loss. The 90-day realized profit-to-loss ratio has fallen under 1, indicating more holders are selling at a loss than taking profits.
US-listed spot Bitcoin ETFs saw a rebound on Wednesday as Bitcoin climbed back above $68,000. The funds attracted about $506.5 million in daily inflows, the largest since early February, putting the funds on track for their first weekly inflow after five weeks and $3.8 billion in outflows.
Total supply in loss Bitcoin. Source: Glassnode
Big Questions: Is China hoarding gold so yuan becomes global reserve instead of USD?
