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Gold is trading at $1402, up 0.8% after two missiles were spotted on a Russian radar in the Mediterranean this morning, triggering uncertainty across financial markets. It was later announced that Israel was performing a missile test.
Gold benefited from the flight to quality factor, as traders bought the precious metal on the prospect of conflict starting in the Middle East. The yellow metal has managed to hold its gains even after Israel’s confirmation. The sudden jump offers an indication of what would happen to the price of gold if there was a militarily invasion of Syria.
Tomorrow’s Beige Book statement from the US, which is a round-up of the US economy, could provide an idea of when the Federal Reserve will look to taper its quantitative easing programme. The Fed has said it will trim the QE scheme between now and December. When the Fed finally begins tapering we could see traders buy into the safe-haven asset of gold.