Have the Issues in Iraq Caused a Price Hike in Gold?

The gold market suffered during the start of this summer as its price plummeted during May and into June. However, its value started to recover during the middle of the month, showing promising numbers as June comes to a close. It bounced back from 119.70 on June 2 to 122.96 by June 13 with a 2.7 percent increase in just 11 days, as recorded by the SPRD Gold Shares chart.

According to John Burke of Wall Street Sector Selector, the two-percent rebound by gold ETFs after a steep dive is due to the continuing crisis in Iraq and the three-month long disarray in eastern Ukraine. These events and their repercussions prompted traders to go back and invest in gold—in both spot trading and ETFs. Buying gold futures is also becoming popular again among investors, as the price of gold futures indicate the buyers becoming bullish again.
However, Avi Gilburt wrote on Seeking Alpha that the current predicament in Iraq is not really a major thrusting factor as to why there has been a “rally” in the price of gold—in both spot gold and ETFs—since its noticeable nosedive last month. Gilburt, who also works for Elliot Wave Trader, said that the precious yellow metal’s $4 recovery after the bearish month of May is just the same way analysts used the Crimea situation last April to explain the sudden spike of gold prices on the market.

So, did Iraq really ‘cause’ this rally? Or is it just another headline which coincides with gold rallying to which the media and other analysts will point to make the public feel better that they think they know the ‘reason’ that the rally occurred? I mean, why not blame it on Cantor’s loss as well?” Gilburt wrote.
The June 18 BarChart futures data showed that gold futures exhibit promising results in the long run. While there has been a $0.26 decrease from the June 17 gold future prices, the trend still shows that the movement of gold’s price is upward. If gold futures show little deviation from the projected prices by the experts, traders who cashed in this month may have predicted right—and they could reap the rewards in August. Investors willing to trade gold may find the price of gold here on BullionVault and develop their knowledge as to whether or not gold may yield profit in the following months.

In the end, gold may be affected by even the slightest geopolitical tensions, with the crisis in Iraq as the main example. However, traders should not let these events affect their decision-making process and make investments based on the viability of the trade.

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