Gold prices and related ETFs were pushing toward seven-year highs as the escalating tensions between the United States and Iran encouraged more safety bets, following an airstrike that killed a key Iranian military official.
The SPDR Gold Shares (NYSEArca: GLD) was up 1.1% on Monday while Comex gold futures were 1.0% higher to $1,568 per ounce, trading near their highest level since 2013.
Gold prices rose for their ninth consecutive day on Monday, marking their longest run of gains since January 2018, the Wall Street Journal reports.
Investors have turned to gold toward the end of 2019 as a potential hedge against economic and political uncertainty, especially after U.S. equities rallied toward record highs. The most recent rally may be attributed to rising tensions between Tehran and Washington after president Donald trump Trump reiterated threats to strike Iran if things escalate between the two countries and as markets waited on the inevitable retaliation fto the death of Major General Qassem Soleimani.
“The move that we’ve seen in the past few days is clearly related to the escalation in the Middle East,” Norbert Rucker, head of economics at Swiss private bank Julius Baer, told the WSJ. “The attack sent some tremors that were felt beyond the oil market itself and resulted in a flight to safety, which is exactly what we’ve seen in the gold market.”
“It is more of anticipation of what could happen or what might happen (between U.S. and Iran), which is now reflected in the market. Basically the uncertainty that we don’t know what is going to happen,” Julius Baer analyst Carsten Menke told Reuters. “If this issue is something which remains in the political area, like back and forth accusations and threats, then we should not have a lasting impact on gold.”
Gold has been a go-to safe store of wealth during periods of geopolitical and economic turmoil. For example, Jeffrey Currie, head of commodities research at Goldman Sachs, pointed out that the precious metal performed well during both the Gulf Wars and following the September 11 attacks in 2001.
“The geopolitics is taking center-stage,” Benjamin Lu, an analyst at Phillip Futures, told Reuters. “The Iran-U.S. tensions have escalated to a boiling point, that’s what has been pushing gold prices up.”
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