The Houthis, Iran, and the Price of Gold
The American and British Intervention
Thursday morning, the United States and the United Kingdom conducted a strike targeting Houthi forces in Yemen. The Houthis ongoing aggression in Yemen and harassment of trade in the Red Sea prompted this military action. Their location in Western Yemen puts them in a great position to harass global trade. The Suez Canal is one of the most essential locations influencing global trade as it allows cargo ships to avoid sailing around the Cape of Good Hope in South Africa. However, the Houthis have consistently committed terrorist attacks on these cargo ships in the Red Sea. These attacks have made trade by the Suez Canal increasingly dangerous. This is why the US and UK conducted this strike to neutralize the Houthis. The apparent goal is to limit their ability to affect trade for both countries.
The Houthis Response
However, this strike does not seem to have deterred the Houthis. The Houthi forces retaliated by launching attacks on additional cargo ships in the Red Sea. On Monday, the Houthis fired a missile that struck a US-owned ship off the Gulf of Aden. The day before, they had fired an anti-ship cruise missile at a US Destroyer in the Red Sea. This countermove exacerbates regional tensions and underscores the Houthi rebels’ determination to disrupt maritime trade routes.
How Does Iran Fit?
As if the conflict was not complex enough, today, missile parts that Iran smuggled to the Houthis were discovered by Navy SEALs. It has long been speculated and known that Iran supports the Houthis. The American government believed that Iran was smuggling weapons to the Houthi terrorists. However, this new find by the US Navy Seals confirms that the Houthis are using Iranian missiles and that their missiles are being used to target American ships. This revelation highlights external support for the Houthi insurgency. This also raises concerns about the involvement of Iran in fueling the conflict.
Why It Matters?
The interconnected dynamics between the American and British attack on the Houthi forces, their retaliatory strikes on cargo ships in the Red Sea, and the discovery of missile parts with alleged ties to Iran contribute to a rapidly evolving and complex geopolitical landscape. This series of events intensifies tensions in the Middle East. Do not forget that Iran also backs Hamas, which is in the middle of a war with America’s ally, Israel. These conflicts continue to escalate and have far-reaching implications for the region’s (and the world’s) international trade, shipping, and diplomatic efforts.
What Does This Have To Do With Gold?
You may be wondering why a precious metals company is highlighting these conflicts. The answer to this question is the potential impact on the price of gold. Gold, known for its sensitivity to geopolitical tensions, may continue to experience a sharp increase in demand amid the heightened uncertainties in the region. Investors concerned about the broader conflict’s potential impact on global markets view gold as a traditional hedge against volatility. As the situation unfolds, the international community and financial markets will closely monitor the developments, recognizing the intricate relationship between military actions, external support, and their repercussions on regional stability and global economic dynamics. If the conflicts continue to escalate, look for the gold price to respond.
