The rate of the yellow precious metal approached its seven-year high already in the second week of 2020 and now is equal to 1577 dollars per ounce. The reason for this price rally was an American air strike, which killed one of the most influential Iranian generals, which increased the degree of political tension in the Middle East.
Thanks to this, gold instantly rose in price by 3.8% since the beginning of 2020. Recall that in the past 2019, the yield of precious metals was 18%, and the annual maximum was reached in September ($ 1,551 per ounce). Then gold showed the largest annual increase in almost a decade, helped by a weakening dollar, lower real rates and geopolitical problems.
US President Donald Trump allowed a targeted attack on Baghdad, and his goal was Kassem Suleimani, an Iranian general who led the Al-Quds Special Forces. The top leader of Iran promised to avenge the Americans for what happened. Currently, the United States plans to send an additional 2,800 troops to the 700 that have already been sent to Kuwait.
“Currently, market participants are afraid of reaching a new level of escalation in this region. The US air strike on Iraq is the most important factor in the growth of the yellow precious metal, ”said Daniel Briezmann, an analyst at Commerzbank AG.
According to RBC Capital Markets, rising gold prices at the end of last year improved investor attitudes towards precious metals. Many investment banks (Goldman Sachs, Citigroup and UBS) predicted a rise in the price of their main defensive asset up to $ 1,600 per ounce in 2020.