Gold prices surge as tensions ratchet in Middle East
By Abigail Townsend
Date: Wednesday 08 Jan 2020
(Sharecast News) - The price of gold has surged after Iran launched retaliatory missile strikes against US targets, sending investors rushing to safe haven stocks.
The price of gold surged by more than 2% early on Wednesday, breaching $1,600 for first time since 2013. Prices eased slightly as the morning wore on, but still remained high, with the precious metal trading at $1,584.15 by 1000 GMT.
More than a dozen missiles struck two US air bases west of Baghdad around 0200 local time, in retaliation for the US killing of Iranian general Qasem Soleimani. It was not immediately clear if there were any casualties, although US president Donald Trump tweeted "All is well!" shortly after the attacks. He added: "Assessment of casualties & damages taking place now. So far, so good!"
Russ Mould, investment director at AJ Bell, said: "A new twist in the Middle East saga has put the boot into markets again. Stocks were in negative territory on Wednesday after Iran targeted US troops with missile strikes. Brent Crude oil prices rebounded, while gold prices advanced, having briefly exceeded $1,600 per ounce when the news broke.
"This is not he healthy start to the New Year expected by investors."
Lukman Otunuga, senior research analyst at FXTM, said: "Escalating tensions in the Middle East have hit global risk appetite, boosting buying sentiment towards safe-haven assets. Gold bulls remain in the driving seat with further upside expected as uncertainly supports the flight to safety.
"Focusing on the technical picture, the precious metal is heavily bullish on the daily charts, as there have be consistent highs and higher lows. A solid daily close above $1,600 may encourage a move towards $1,630. Alternatively, sustained weakness below $1,600 could trigger a retracement back towards $1,570 and $1,555."
Jasper Lawler, head of research at London Capital Group, said: "Intraday volatility has picked up dramatically in gold and oil markets thanks to the rising geopolitical tensions in the Middle East.
"If tensions do die down, as we expect they should, then inevitably gold will give back some of its recent gains. For 2020, we think the outlook has brightened for gold despite the solid gains already made in recent weeks."
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