The escalating diplomatic row between Ankara and Washington has put immense pressure on the Turkish lira and as a result, gold futures trading has nearly doubled in the country as investors scramble for traditional safe havens.
Gold futures volumes have soared on Turkey's stock exchange as the recent plunge in the volatile national currency attracts speculation and boosts the local price of the precious metal. The 90-day average daily volume reportedly doubled to 40,000 contracts, from about 17,000 in March. At the same time, the price for an ounce of gold in Turkish lira surged by more than 50 percent.
“It definitely would make sense to own gold now in Turkey given the depreciation of the lira,” precious metals strategist at Mitsubishi Corp UK Jonathan Butler told Bloomberg. “This is consistent with golds status as a safe haven and will likely be mirrored on the physical market with demand increasing for jewelry and gold bars.”
Last week, Turkish President Recep Tayyip Erdogan called on the countrys citizens to sell foreign currencies to bolster the plummeting lira. The Turkish currency has managed to recover by 16 percent, trading at 6.16 lira against the US dollar on Wednesday, after a record plunge earlier this week.
Overall, the lira has lost around 40 percent of its value this year amid investors concerns over central bank steps toward tightening the monetary policy and the growing dispute with the US.
Turkey and the US have been at odds over the detention of American pastor Andrew Brunson in Turkey. Brunson has been charged with aiding the failed military coup two years ago and is facing 35 years in a Turkish prison.
Washington has imposed sanctions on Turkish officials and slapped the country's steel and aluminum exports with additional tariffs. Ankara responded by imposing tariffs on a number of US goods including alcohol and cars, while President Erdogan has called for a boycott of American electronic products.
Though, Turkish gold trading volumes are low compared to those at major exchange hubs in London and New York, the country is a significant source of global demand for the precious metal. Turkey is currently the worlds seventh largest gold consumer with roughly 72 metric tons of gold being purchased annually. The country is also one of the major consumers of gold jewelry.
For more stories on economy & finance visit RT's business section