Gold bullion and related exchange traded funds have strengthened to a two-week high as violence in Iraq fueled the flight to safety.
The SPDR Gold Shares (GLD) , iShares Gold Trust (IAU) and ETFS Physical Swiss Gold Shares (SGOL) were slightly up 0.1% Friday. The gold-related ETFs have gained about 2.5% since the June 2 low. [Tarnished Gold ETFs Try to Glimmer]
“We are seeing some flight to safety because of the Iraq issue,” George Gero, a vice president and precious-metals strategist at RBC Capital Markets, said in a Bloomberg article.
In Iraq, the the northern countryside is being swiftly ravaged as Sunni militants attacked every major city in the upper Tigris River Valley. Now, the militants are advancing toward Baghdad, Iraq’s capital, the Wall Street Journal reports.
Investors were also cautious after U.S. President Barack Obama warned of a possible military intervention in Iraq after the escalating violence continued to spread.
COMEX gold futures were up 0.1% Friday, trading around $1,275 per ounce. Gold futures for August delivery touched $1,277.6, the highest since May 27, in earlier trading. The precious metal has gained 1.7% this week after five consecutive gains, the longest rally in three months.
Moreover, gold has acted as a safety hedge against the recent decline in the equities markets. The S&P 500 has been weakening since reaching a record high June 9.
“Gold found safe haven buying from investors on falling global equity markets,” Gnanasekar Thiagarajan, Director, Commtrendz Research, said in a Business Standard article. “Crude (oil) has fundamental reasons to move up on supply fear from Iraq. While the sentiment will remain elevated in crude oil, gold will relatively calm down faster than crude.”
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of GLD.
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