The Australian dollar gold price has temporarily moved into record territory of around $2350 an ounce as tensions between the United States and Iran increased yesterday.
Media reports that Iran had fired several missiles against the Al Assad airbase and Erbil base, both in Iraq, flooded online news services early yesterday Australian time. US troops were reportedly based at both facilities.
The missile strikes were said to be in retaliation of the death of Qassem Soleimani, head of Iran’s Quds Force, who was killed by a US drone attack.
According to gold consultants Surbiton Associates, a record Australian dollar gold price was recorded yesterday morning following a rise in the US dollar gold price to more than $US1610 and a fall in the local currency against its US counterpart.
Surbiton Associates director Sandra Close said gold had once again proved it still retained its safe-haven status with the increase in value.
“The gold price moved sharply upwards this morning (January 8) Australian time and it will be interesting to see what happens when European gold trading commences and when US trading begins some hours’ later,” Close said.
The Australian dollar gold price did, however, finish yesterday’s trading below the earlier high at $2308.14 an ounce (source: ABC Bullion website), with the escalating tensions easing between the US and Iran.
Close said the relationship between the US and Iran had historically caused the gold price to increase in value a number of times.
“If you look at the factors that have pushed the gold price higher, tensions between Iran and the US go back many decades,” Close said.
“Remember, for example, the US hostages in Iran Crisis which occurred 40 years ago, when Ronald Reagan was US president.”
A Surbiton statement also recalled increasing tension in the Middle East over oil supplies that date back several decades.
For example, the first Oil Shock in 1973, followed by the second Oil Shock in 1979-1980. Both oil crises also caused the gold price to move higher, including to record levels in some instances.
The latest rise means gold has this year picked up where it left off in 2019 after a series of new peaks in Aussie dollar terms.
As was the case with the US-Iran concerns, it was global political tensions that were the main cause of the increase in the gold price during 2019.
The US was also involved in the international tensions last year, albeit more prominently from a trade perspective with Asian power, China.