Economy

Gold price
Gold up after yesterday's steep decline

Gold is bouncing back after reaching its lowest level in over a week on Tuesday.

Tuesday's decline was due, among other things, to a stronger dollar and poorer prospects for an interest rate cut from the Fed, where the Middle East conflict risks pushing up inflation.

At the same time, the gold price has been decoupled from traditional price factors such as the dollar and interest rates since the beginning of the year, Ilya Spivak, macro manager at Tastylive, told Reuters, and sees potential for continued growth.

So does Christopher Wong, strategist at OCBC.

- The underlying fundamentals have not changed to any significant degree. Structural drivers such as geopolitical uncertainty, political unpredictability and the need for portfolio diversification remain.

Gold fell 4 percent on Tuesday but is up 1.5 percent on Wednesday morning.

Seoul trading halted after biggest plunge since 2008

The war in Iran has shaken investors' view of emerging markets. Stock markets and currencies are falling as higher oil prices and a stronger dollar squeeze oil importers while capital flows out of the region.

“The resilience of emerging markets is now being tested, and this is where we could see the biggest impact after a very strong start to the year,” said Sonal Desai, chief investment officer for fixed income at Franklin Templeton.

Investors are rotating towards oil exporters while countries such as South Korea and India are seen as particularly vulnerable.