The Western camp is no longer monolithic! UK, Canada and other five countries jointly sanction Israel’s far right minister, leading to increased demand for gold as a safe haven

On June 10th local time, the United Kingdom, Canada, Australia, New Zealand, and Norway issued a joint statement announcing asset freezes and travel bans on Israel’s National Security Minister Itamar Ben Gavir and Finance Minister Bezalel Smotrich. The reason for the sanctions is that the two individuals have repeatedly incited extreme violence against Palestinians, including supporting settlement expansion and advocating for forced displacement of Palestinians. This is the first time that Western countries have imposed sanctions on Israeli cabinet ministerial level officials, marking a significant divergence in Western policies towards Israel.

1、 Background of the event and reactions from all parties involved

The two sanctioned ministers are both leaders of Israel’s far right political parties, whose radical remarks and actions have long sparked international controversy. For example, Smotrich once called for the “destruction of Gaza” and pushed for the annexation of the West Bank of the Jordan River, while Ben Xavier openly opposed the entry of humanitarian aid into Gaza, claiming that it would flow into the hands of Hamas. The five countries emphasized in the joint statement that the atrocities committed by extremist settlers and the expansion of settlements are endangering the “two-state solution”, and their actions “seriously violate Palestinian human rights”.

Israel quickly responded strongly. Foreign Minister Gideon Saar called the sanctions “unacceptable” and the government will hold a special meeting next week to discuss countermeasures. Smotrich announced on the evening of the 10th that he would cancel the exemption for cooperation with Palestinian banks, which could lead to further deterioration of the Palestinian economy. US Secretary of State Rubio condemned the actions of the five countries on the same day, stating that they “do not contribute to advancing the ceasefire” and urging the lifting of sanctions.

2、 Geopolitical influences and market reactions

This sanction has exacerbated the division within the Western camp. Although the United States has repeatedly reiterated the US Israel alliance and vetoed the UN Security Council’s Gaza ceasefire resolution in May, the actions of the five countries demonstrate that the tolerance of European and Commonwealth countries towards Israeli policies has reached freezing point. Analysts point out that this may weaken Israel’s international legitimacy and provide a precedent for more countries to take similar measures in the future.

Driven by the escalation of geopolitical risks, the demand for safe haven in the gold market has significantly increased. On the morning of June 11th in the Asian market, spot gold prices fluctuated upwards, reaching a high of $3337.21 per ounce and finally closing at $3336.14 per ounce, an increase of 0.39%. During the European trading session, gold prices continued to rise, with London gold prices breaking through the $3340 mark at one point, reflecting market concerns about the uncertainty of the Middle East situation.

3、 Expert opinions and future prospects

Hugh Lovatt, Senior Researcher at the European Council on Foreign Relations, pointed out that the sanctions imposed by the five countries are “unprecedented” and highlight the strong dissatisfaction of Western countries with Israel’s policies. Gold market analysts believe that short-term geopolitical risk premiums will continue to support gold prices, but attention needs to be paid to the Federal Reserve’s monetary policy movements and the progress of US China trade negotiations. If Israel takes further countermeasures, such as expanding the economic blockade on Palestine, it may trigger further escalation of the Middle East situation and push gold prices towards $3380 (200 day moving average).

The sanctions imposed by the UK, Canada, and other five countries on Israel’s far right minister not only exposed the rifts within the Western camp, but also injected new safe haven momentum into the gold market. Under the dual game of the Federal Reserve’s policy path and geopolitical risks, gold prices may maintain a volatile and strong pattern in the short term. Investors need to closely monitor Israel’s countermeasures and the subsequent response of the international community.