Fighting in Iraq and Ukraine has seen gold reach a three week high as investors favor gold over high-risk investments
Continuing turmoil in Eastern Europe and Iraq has again reinforced the safe-haven appeal of the yellow metal over riskier paper investments.
Spot gold was up 0.4 percent to $1,281.36/oz by 1221 GMT, reaching its highest price since May 27 at $1,284.85 earlier in the session. U.S. gold futures for August delivery were up by 0.6 percent to $1,282.20.
Robin Bhar, analyst at Societe Generale said “Escalating violence in Iraq is going to be bullish for gold and technically we could see another leg up pushing gold above $1,300,“.
Investors traditionally look to gold and other precious metals during times of political or financial trouble, due to their being perceived as an insurance against risk.
The Commodity Futures Trading Commission released data last Friday showing investor sentiment towards gold to be turning more bullish – and hedge funds and money managers have increased their bullish bets in gold futures and options, their first increase in five weeks.
This positivity should be viewed alongside some caution thanks to this week’s Federal Reserve policy meeting – a meeting that may cut short any rally in gold for now.
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