◆ Gold surged to a seven year high at $1,610.90 overnight prior to retreating as markets experience volatility due to the risks of a U.S. retaliation after Iran’s attacks on U.S. bases in Iraq.
◆ The severe, but long expected, re-escalation of geopolitical tensions led to the gold price surging overnight as speculators go long gold futures and investors diversify into the hedging and safe haven asset that is gold.
◆ U.S. stock futures tumbled this morning in response to Iran’s retaliation against the U.S. in rocket attacks on two Iraq bases. The S&P 500 index future lost almost 1.5%, breaking down a key support level at 3,200 points.
◆ Asian and European equity markets followed US futures lower prior to stabilizing, as investors reduced allocations to risk assets and moved into safe havens.
◆ From a trading perspective, gold is very overbought after the 10% move higher in the last 30 days. However, the scale of the geopolitical uncertainty could see gold stay overbought in the short term.
◆ If things deteriorate significantly in the Middle East then we will likely see oil prices surge and there is a strong possibility of a massive short squeeze which propels gold (and silver) prices much higher. A close above $1,600/oz should see us move quickly higher to test the $1,700/oz level.
◆ Gold’s record nominal highs at $1,900/oz (see chart below) may be surpassed later this year given the very strong demand for gold bullion due to the host of financial, geopolitical and monetary risks
◆ Prudent gold bullion investors will as ever take a long term view and those seeking to diversify and hedge risks with an allocation to gold, should
dollar cost average into their gold holding.
NEWS and COMMENTARY
Gold price scales $1,600 after Iran attacks US military base
Gold price surges amid geopolitical uncertainty
Dow futures plunge after Iran retaliation raises fears of bigger conflict
Oil prices surge 4% following attack on Iraq airbase
GOLD PRICES (USD, GBP & EUR – AM/ PM LBMA Fix)
07-Jan-20 1566.50 1567.85, 1190.85 1197.05 & 1402.80 1406.52
06-Jan-20 1576.85 1573.10, 1198.09 1197.29 & 1408.44 1406.51
03-Jan-20 1547.40 1548.75, 1182.37 1184.48 & 1389.57 1387.99
02-Jan-20 1520.55 1527.10, 1151.36 1161.51 & 1358.46 1366.91
31-Dec-19 1523.00, 1157.78 & 1358.06
30-Dec-19 1511.50 1514.75, 1152.37 1152.57 & 1350.22 1351.91
27-Dec-19 1510.60 1511.50, 1156.36 1152.67 & 1356.37 1353.85
24-Dec-19 1490.85 1152.58 & 1345.94
23-Dec-19 1483.95 1482.10, 1141.90 1133.95 & 1338.97 1334.35
20-Dec-19 1476.90 1479.00, 1132.19 1132.33 & 1328.20 1327.55