Gold jumps over Syria concerns

The price of gold has risen to a three-month high of $1429, up 1% today, as traders fly to quality over mounting tensions in relation to the political uncertainty in Syria.

Gold is benefiting from the flight to quality factor – when traders are nervous it is not uncommon for equities to be sold as buyers instead flock to a lower-risk asset like gold. When it comes to investments, people tend to fear the worst, and the longer western countries discuss an invasion of Syria, the more nervous investors may become, which could drive gold higher still.

The US government not only has the Syrian issue to deal with, but also its own debt ceiling which could be reached by mid-October. The last time that the debt ceiling was an issue, the US government raised the ceiling, which led to S&P stripping the US of its triple-A rating. In turn, traders sold equities and bought gold. Any fresh talk of raising the US debt ceiling could also push gold higher.

Spot Gold (DFB) chart

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