Gold Reaches $1,610/oz Prior To Retreating As Iran Attacks US Bases

January 8, 2020

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.

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Mark O'Byrne is executive and research director of www.GoldCore.com which he founded in 2003. GoldCore have become one of the leading gold brokers in the world and have over 4,000 clients in over 40 countries and with over $200 million in assets under management and storage.We offer mass affluent, HNW, UHNW and institutional investors including family offices, gold, silver, platinum and palladium bullion in London, Zurich, Singapore, Hong Kong, Dubai and Perth. 

Gold is the world’s oldest and most known currency.

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