John Luca: Middle East on Fire... Gold Reshaping Global and Local Market Dynamics
Waleed Farouk
As geopolitical tensions in the Middle East continue to escalate, global gold prices have surged to record highs, driven by investors' fears of a deepening military conflict between Israel and Iran—an event that has once again underscored the significance of gold as a safe-haven asset in times of international crises.
Economist John Luca stated that the ongoing war in the Middle East is likely to push gold prices even higher, both globally and domestically, as investors increasingly seek the metal as a hedge against rising risks.
He noted that gold prices soared over the past days, surpassing the $3,400 per ounce threshold—an all-time historic high—fueled by market panic following intensified military rhetoric and exchange of strikes between the two sides, amid a complete absence of de-escalation prospects.
Luca pointed out that precious metals traders have strengthened their long positions in expectation that the conflict may widen, potentially disrupting global supply chains and reducing risk appetite across financial markets. This has triggered an accelerated wave of gold buying.
The global turmoil has had an immediate impact on the Egyptian gold market, which witnessed sharp price increases in a short period, further exacerbated by the weakening Egyptian pound and growing domestic demand for bullion and gold coins.
"Gold is now trading above $3,400 per ounce, and with tensions rising and no signs of calming, the price trajectory is likely to remain upward, especially given the intense uncertainty plaguing the markets," Luca said.
He warned that the Egyptian market is heading into a period of high volatility, driven by currency depreciation and mounting inflationary pressures—factors that will further fuel price hikes.
'The significant rise in gold prices will likely slow down consumer demand for jewelry,' he added, 'as buyers shift preference toward bullion and gold coins that do not carry high manufacturing costs, seeking to preserve the value of their money and use it as an investment.'
Luca also noted that some manufacturers have already started reducing craftsmanship margins in an effort to attract buyers, but demand for gold jewelry is expected to remain muted in the near term.
He anticipated that the Egyptian gold market may face supply shortages in the coming period due to import restrictions and the surge in global prices, which could further widen the gap between buying and selling prices.
Luca emphasized the importance of caution when making buy or sell decisions amid persistent price fluctuations. He advised citizens to closely monitor the market and consider raw gold as an investment tool while avoiding high-cost ornamental pieces.
He concluded by stressing that the latest developments reaffirm gold's role as one of the most powerful defensive assets during wars and political unrest. With the situation between Israel and Iran intensifying, expectations are growing for gold prices to reach new, unprecedented levels, prompting both individuals and investors to reassess their investment priorities.
"In light of all this," Luca said, "market agility, precise timing in buying and selling, and smart selection of gold types—whether bullion or coins—are the key factors that will determine whether citizens and investors gain or lose during this sensitive phase."
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