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Commodity futures

Gold Prices Surge Amid Global Uncertainty

Strategic Insights

— 2 min read

Gold prices surged as investors sought safe-haven assets due to concerns over the US dollar, decline in equity markets, and terrorist attacks in Iraq and Turkey. According to the Associated Press, the head of the Iraqi Governing Council, Abdel-Zahraa Othman, was among four Iraqis killed in a blast near a US checkpoint in Baghdad. The market saw improving physical demand for gold, as well as a reduction in speculation, prompting a near-term recovery. Analyst John Reade of UBS stated that risk aversion in gold may return after the terrorist attack, while also noting that larger and more sustained gains will require further weakness in the US dollar.

Key Takeaways:

  • Spot gold prices approached $383 a troy ounce due to profit taking and weaker US dollar.
  • The Iraqi Governing Council head, Abdel-Zahraa Othman, was among four Iraqis killed in a blast near a US checkpoint in Baghdad.
  • The Commodity Futures Trading Commission reported a 16,645 contract decline in net long exposure to the Comex gold futures market, a 30% drop from the previous week.
  • Analyst John Reade of UBS noted that risk aversion in gold may return after the terrorist attack and larger gains will require further US dollar weakness.
  • Platinum remained firm with strong buying interest, hitting a high bid of $817.50/oz.
  • Palladium was firmer, but fell short of the $250/oz level, with support seen down to $230/oz.
  • Silver prices surged to $5.89/oz, with dealers citing support at $5.65/oz and a move to the $6/oz level sought.
  • Investors and traders in silver remained sidelined due to recent price volatility and uncertainty surrounding China and US interest rate increases.

Statistics:

  • Spot gold fixed in the London AM session at $380.80/oz.
  • The Comex gold futures market reported a 30% decline in net long exposure, dropping from 38,018 contracts to 21,373 contracts.
  • Platinum prices saw a high bid of $817.50/oz due to strong buying interest.
  • Palladium prices fell just short of the $250/oz level, with a target move above this area.
  • Silver prices surged to $5.89/oz, with support seen down to $5.65/oz.

Sources:

  • Reuters "Gold prices surge amid global uncertainty" (No date)
  • Associated Press "Iraq: 4 Iraqis killed, 6 wounded in Baghdad blast" (No date)
  • Commodity Futures Trading Commission "Commitments of Traders" May 11, 2004
  • UBS "Gold: A Safe Haven?" (No date)
  • COMTEX "News Provided by COMTEX" (http://www.comtexnews.com)

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