Price of Gold Fundamental Daily Forecast – Intraday Turnaround Could Be Military RelatedThe turnaround in the gold market is a breaking event so the details are sketchy. It could be related to geopolitical concerns surrounding U.S. military activity in the Middle East.
Gold futures are edging higher on Wednesday shortly before the regular session opening. Helping to support the precious metal are a drop in U.S. Treasury yields, a weaker U.S. Dollar and lower demand for risky assets. This week’s price action indicates that all three of these factors have to be moving lower in order to draw buyers into the gold market.
At 09:44 GMT, June Comex gold is trading $1299.80, up $3.40 or +0.26%.
Gold is reversing earlier weakness that was fueled by optimism surrounding trade talks between Washington and Beijing, which soothed investor concerns, boosting Treasury yields, global stocks and the greenback.
Is Military Activity in the Middle East Behind Gold’s Intraday Reversal?
The turnaround in the gold market is a breaking event so the details are sketchy. It could be related to geopolitical concerns surrounding U.S. military activity in the Middle East.
The rally in gold could be related to Washington ordering the departure of non-emergency government employees from Iraq on Wednesday, after repeated U.S. expressions of concern about threats from Iranian-backed forces.
According to reports, the U.S. State Department has ordered the pullout of the employees from both the U.S. Embassy in Baghdad and its consulate in Erbil, the embassy said in a statement.
“Normal visa services at both posts will be temporarily suspended,” it said, recommending those affected depart as soon as possible. It was unclear how many staff would leave.
A U.S. State Department spokesman said the decision to withdraw non-emergency staff was based on a security assessment, but would not give details on how many personal were leaving.
“Ensuring the safety of U.S. government personnel and citizens is our highest priority and we are confident in the Iraqi security services’ (ability) to protect us,” he said.
“But this threat is serious and we want to reduce the risk of harm.”
Earlier in the week, the U.S. military reaffirmed concerns about possible imminent threats from Iran to its troops in Iraq, although a senior British commander cast doubt on that and Tehran has called it “psychological warfare.”
Fears Rise Over Conflict with Iran
“Both Iran and the United States are seemingly putting in place networks and infrastructure to deter military attacks against on another’s assets in the region,” Ellie Geranmayeh, a senior policy fellow at the European Council on Foreign Relations, told CNBC on Monday.
“In the absence of a serious diplomatic channel, the current maximalist approach from the Trump White House could spark a new cycle of intentional or inadvertent military confrontation in the region.”
Furthermore, on Sunday, Secretary of State Mike Pompeo said that all options – military and otherwise – were on the table in case Iran “makes a bad decision.”