The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
The escalation of tensions in Iraq has caused markets to wobble, as Iraqi dissidents ISIS have taken hold of border crossings to both Jordon and Syria. The ability to shepherd large numbers of unregulated citizens into the country has caused global concern. The US is still monitoring the situation at the moment, and at present has only sent a few hundred troops to reinforce defenses at their embassy. It is currently unclear if the warships that the US now has patrolling the gulf will be utilised for more than just monitoring, but worries that the west will once again have to step in to support stability in the troubled country persist. The resulting flight to security has been one of the biggest driving forces behind the gold price moving higher, and at present things feel like they will get worse before they get better.
The other aspect that will help the metal’s price is the lack of interest-rate stimulus in the US dollar. Federal Reserve chair Janet Yellen has stated that the longer-term outlook for US interest rates is to remain low and this continuing downward pressure on dollar strength will help the precious metal.
Gold has moved into overbought territory, but as long as it remains above the 50- and 200-day moving averages then I would maintain my optimistic stance.