News Column

Weekly Round-Up: Gold Reaches Three-Week High on Political Tensions

August 8, 2014

Staff Writer


As always when political tensions arise, gold increases on safe haven demand. On Friday,  gold reached a three-week high today after President Barack Obama authorized air strikes on Iraq. The air strikes were authorized in order to “blunt” the effects of the Islamic militants in Northern Iraq, who are possibly instigating genocide against religious minorities.

“There is some panic in the equity markets after the Iraq announcement, and that, along with the Ukraine crisis is bringing safe-haven demand for gold,” Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong told Reuters. “Gold could climb quickly up to $1,325 an ounce.”

Spot gold increased $1.80 to reach $1,315 an ounce, but prices may rise further, Reuters reported. Gold futures for September delivery on the Comex traded up $4.30 to reach $1.316.80 an ounce, the source cited.

Likewise, silver prices also increased in value by $0.05 to reach $19.96 an ounce, according to Reuters.

Meanwhile, copper on the London Metals Exchange fell $13.97 to reach $6,974 per tonne, according to Reuters. Comex copper futures for September delivery are trading up $0.01 to reach 3.18 a pound, CME Group reported.

The question of Chinese demand for copper remains in the air. More data will come next week as China releases information about its economy and the possibility that it will continue constructing more buildings, according to Reuters.

Brent cruderose by $1.41 to reach $106.85 on news that President Barack Obama was authorizing strikes on Iraq. Investors have been concerned that insurgents there will disrupt the oil industry, and the air strikes are further evidence of instability in that region, according to Bloomberg.

The long term effects of this remain uncertain.

“A prolonged increase in prices would only be justified if the oilfields were captured by ISIS and ISIS declared them to be shut indefinitely, or worse, set them on fire,” Christopher Bellew, senior broker at Jefferies International Ltd., said to Bloomberg.

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Source: Investing News Network

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