The Impact of Gold on Financial Markets: Understanding Global Markets and Iran

Gold, a timeless and highly valued asset, holds a vital position in financial markets worldwide, including in Iran. It is widely viewed as a safe investment due to its ability to withstand inflation and currency fluctuations, especially during economic downturns. This article examines how gold influences both global markets and Iran, focusing on factors like online gold purchases, mirror bangles, and gold bullion.

Gold in Global Financial Markets

Around the world, gold is considered a safe haven, particularly during uncertain times like financial crises, wars, or pandemics. For instance, during the 2008 financial crisis and the 2020 COVID-19 pandemic, gold prices rose significantly.

The price of gold is often inversely related to the strength of the U.S. dollar. When the dollar weakens, gold becomes cheaper for other currency holders, leading to higher demand and prices. Monetary policies from central banks, including the U.S. Federal Reserve, also impact gold prices. When interest rates are low, people are more likely to buy gold because gold doesn’t pay interest, making it more attractive compared to saving money with low returns.

In recent years, buying gold online has gained popularity globally. Digital trading platforms have made it easier for anyone to invest in gold, with countries like India and China leading in demand.

The Status of Gold in Iran’s Market

In Iran, gold is valued both as an investment and for its cultural importance. It is often used for saving and in traditional jewelry. Mirror bangles, a popular choice for weddings and celebrations, highlight the cultural demand for gold in Iran.

Facing challenges like sanctions, currency instability, and inflation, Iran’s economy makes gold a crucial asset for preserving wealth. Unlike global markets where gold is mainly traded as bullion or through ETFs, in Iran, physical gold such as coins and jewelry is more common. Gold bullion is gaining interest among professional investors but is still not as widespread as coins and jewelry.

A distinctive factor in Iran is the direct impact of exchange rates on gold prices. Since gold is priced in dollars globally, any increase in the dollar's value results in higher gold prices in Iran. This has made gold a preferred investment, though high costs sometimes reduce jewelry demand, leading investors to prefer coins for liquidity.

Comparing Gold’s Impact in Iran and Global Markets

Gold serves different roles in Iran compared to global markets:

• Inflation and Economic Instability: In Iran, gold helps protect wealth against high inflation and currency depreciation, while global gold prices are more affected by interest rates and global crises.

• Cultural Demand: The demand for gold jewelry, like mirror bangles, is strong in Iran due to cultural reasons, unlike in global markets where investments focus more on gold bullion or ETFs.

Access to Digital Markets: Globally, digital platforms have made gold trading accessible, but in Iran, issues persist such as trust in online platforms and payment restrictions.

Impact of Macro Policies: Global markets are influenced by central bank policies, while Iran’s gold market is also shaped by domestic factors like currency controls and sanctions.

Challenges and Opportunities in Iran’s Gold Market

The Iranian gold market faces challenges such as price volatility, supply limitations due to sanctions, and transparency issues in some transactions. However, opportunities exist in expanding online gold purchasing platforms, which can improve retail investor access.