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Geopolitical Violence Likely to Keep Gold Prices Above $1300 An Ounce

Gold prices dropped for the first time in seven weeks, but are expected to hold above $1300 an ounce due to the deepening crisis’ in Ukraine, Gaza and Iraq. With world pressure mounting on Russian Premier Vladimir Putin, bankers looked to make some quick gains.

Last Monday gold fell by $31 – the biggest daily dip of the year so far. The flurry of sales came following the announcement news that US Federal Reserve chairwoman, Janet Yellen had announced interest rates would be lifted sooner than analysts expected if US economic data continued to improve.

Unemployment in the US fell by 3000 in June, far better than had been predicted and an increase in manufacturing activity also showed sustained momentum in the improvement of the economy. The mid-Atlantic region returned its best gains in almost 3 and half years.

Ukraine crisis

The early losses last week were recovered when pro-Russian rebels gunned down Malaysian airline MH17. US officials are pointing the finger towards the Kremlin and demanding answers. With the tension growing over the direct involvement of Russia in the geopolitical divide in eastern Ukraine, gold could be set to rise again this week.

There are no signs of an end to the conflict on the Gaza Strip either as violence escalated over the weekend. A heavy Israeli assault on the Hamas occupied neighbourhood of Shaja’ia on Monday took the death toll to over 500.

US Secretary of State John Kerry is due to arrive in Egypt to push for a cease fire and both Barrack Obama and the UN have called for an end to the fighting. The ongoing conflict between the two nations is on the brink of tipping point and has caused outrage around the world.

A resolution to the violence in Iraq is still raging also as Sunni extremist continue to launch offensives on Baghdad. Around 400,000 Shi’ite Muslims were forced to flee their homes last week taking the evacuation in the region to over 1 million. Some quarters are now calling for US military intervention which will support gold prices.

Analysts in limbo

Market analysts are now unsure what will happen to the money markets this week. With any one of the regions in military crisis in danger of boiling over into full-scale war, traders are on red alert to snap up gold.

Precious metals always perform well in times of war as governments and civilians invest in gold and silver. Governments use them as a hedge against other investment, and throughout history have been known to melt them down for bullets. Civilians invest in precious metals for insurance if they cannot access banks or become refugees. Bullion sales are hitting record peaks.

Although the economic outlook is looking healthy, the violent conflicts will keep gold prices above the $1300 threshold. In early morning trading, gold prices were up $2.10 on Friday’s closing price. With the world stage on such shaky ground, now could be a good time to invest in gold whilst stocks are still available.

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