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Gold, Silver And Oil Jump On Middle East “Powder Keg” Concerns

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Today’s AM fix was USD 1,281.75, EUR 947.34 and GBP 755.35 per ounce.          

Friday’s AM fix was USD 1,273.00, EUR 938.17 and GBP 750.06 per ounce.  


Gold climbed $3.10 or 0.24% Friday to $1,276.90/oz. Silver rose $0.14 or 0.72% to $19.70/oz.
Gold and silver were both up on the week at 1.92% and 3.52% respectively.

Middle East ‘Powder Keg’

Concerns over fighting in Iraq and Ukraine saw a global shift into traditional safe haven currencies, precious metals and bonds today as oil rose again and hovered near a nine-month high. European stocks fell.

Worries about Iraq were intensifying after Sunni insurgents seized the mainly ethnic Turkmen city in the northwest of the country over the weekend. It continued to drive fears about widespread turmoil in the country and the region.

Russia said it would cut off gas supplies to Ukraine this morning, setting the stage for a new phase of the months-long conflict between the two nations. The move came after the two sides failed to agree on a price for natural gas, a vital ingredient in Ukraine's energy-intensive manufacturing economy. Ukraine is also a vital link between the rest of Europe and Russia's gas supplies, transporting 15 percent of Europe's gas supplies through its pipelines.


Hopes of Ukraine coming off the boil were dashed after pro-Russian separatists shot down a Ukrainian army transport plane, killing all 49 military personnel on board.

Gold climbed another 0.6% to the highest level in almost three weeks, extending a second weekly increase, as escalating violence in Iraq led to rising oil prices and safe haven demand. Gold rose 1.9%  last week and a fifth day of gains today would be the longest such run since February.

Silver reached a one-month high, while platinum and palladium rose. Silver for immediate delivery climbed over 1% to $19.889 an ounce, the highest level since May 14. Palladium gained 0.9% to $822.09 an ounce, while platinum rose 0.7% to $1,443.25 an ounce.



NYMEX Light Sweet Crude Oil (WTI) - 2014 YTD (Thomson Reuters)


Gold bullion
has advanced 6.7% this year in part because of unrest in Ukraine, where tension escalated last week after pro-Russian militants shot down a transport plane in the east of the country. In Iraq, the army killed more than 279 rebels as fighting intensified in OPEC’s second-biggest producer.

If Iraq's oil supply goes offline, crude prices could reach $150 to $200 a barrel, T. Boone Pickens, founder of BP Capital Management, told CNBC on Friday. "That's where you have to kill demand with price. That's the only way you can do it, because oil won't be there," Pickens said in an interview with "Street Signs."



Gold in U.S. Dollars - YTD 2014 (Thomson Reuters)

Geopolitical risk remains high and does not look like abating any time soon. Indeed, there is now the risk of geopolitical contagion and a serious regional war that could lead to a wider war.

Violence in Iraq exploded as Iraqi separatists,  the Islamic State of Iraq and al-Sham (ISIS), took over the second largest city in Iraq. ISIS forces are just 50 miles from Iraq’s capital, Baghdad.

 Sunni Islamist militants gained more ground in Iraq overnight, moving into two towns in the eastern province of Diyala. U.S. President Barack Obama is considering military strikes to halt their advance towards the capital Baghdad.


To the north, a Kurdish militia known as Peshmerga took over key government installations in strategically important, oil hub of Kirkuk. The situation in Iraq has deteriorated significantly in a very short period of time  and an all-out sectarian conflict is looking more likely as each day goes by.

With Syria's Kurds already exploiting civil war there to run their own affairs, Iraqi Kurdish expansionism is worrying U.S. ally Turkey, which has its own large Kurdish minority and fears a renewed attempt to redraw borders and create a Kurdish state.


Iraqi President Maliki's army already lost control of much of the Euphrates valley west of the capital to ISIS last year, and with the evaporation of the army in the Tigris valley to the north, the government could be left with just Baghdad and areas south - home to the Shi'ite majority in Iraq's 32 million population.

The Wall Street Journal is reported that Iran sent two battalions of Iranian Revolutionary Guards to help the Iraqi government in its battle against ISIS. This is an important development. Iran has already intervened in Syria and has the power to crush ISIS in open combat.


Iran, which it is believed funds and arms Shi'ite groups in Iraq, could be brought deeper into the conflict, as could Turkey to the north. In Mosul, 80 Turks were held hostage by ISIS after Ankara's consulate there was overrun.


NYMEX Light Sweet Crude Oil (WTI) - 20 Years (Thomson Reuters)

Iranian or Turkish intervention would make the conflict inside Iraq much worse. Israel wants to see a continuation of the tough line against Iran which it continues to see as an existential threat.

Gold bullion has increased 6% this year in part as tension between Russia and the U.S. and EU led to some haven demand. Developments in the Middle East are likely to deepen geopolitical tensions between Russia and the West and this should support gold and indeed lead to higher gold prices in the coming months.  


There is still the potential for a wider Middle East conflict as the region remains a ‘powder keg.’ Iraq may be the match that sees the region explode into chaos and war - with attendant effects on global oil prices and the global economy.

7 Important Points To Consider When Owning #Gold

 

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Mon, 06/16/2014 - 22:42 | 4863812 CheapBastard
CheapBastard's picture

Oil over $150 by end of year sounds reasonable.

Mon, 06/16/2014 - 20:31 | 4863414 Illya Kuryakin
Illya Kuryakin's picture

Concerns over.

Mon, 06/16/2014 - 20:25 | 4863396 RECISION
RECISION's picture

The situation in Iraq has deteriorated significantly in a very short period of time - and an all-out sectarian conflict is looking more likely as each day goes by.

 

Or not...

Mon, 06/16/2014 - 17:21 | 4862792 Bárðarbunga
Bárðarbunga's picture

Maybe wait until you get a confirmed "JUMP" in any of the above mentioned... things. Writing an article that quickly becomes bullshit is sort of a 'put the cart before the ass' kind of move.

Anyway, whether it's war or moar war, the central banks and the short sellers can keep the price of anything where they want it.

Markets don't matter. Writing articles that make you think that they matter... priceless.

Mon, 06/16/2014 - 14:46 | 4862123 SAT 800
SAT 800's picture

A blip; a glimmer of hope for the hopeless; a counter-rallyette in the abyssmal slide that is the Gold Market; a mini-reason to delay suicide for one more day; a tiny ray of light that penetrates to the bottom of the filthy dumptster of despair in which Gold Bugs must live; forever, un-noticed, un-loved; forgotten.

Mon, 06/16/2014 - 13:31 | 4861758 Conax
Conax's picture

Silver, Bitche..

aw, nevermind.

Mon, 06/16/2014 - 14:43 | 4862105 SAT 800
SAT 800's picture

CL is OFF .03$ for your information; I remain serenely confident in my underwater short position; plenty of hydr0-codone and loratadine left. What could go wrong? GIVE ME VICTORY OR GIVE ME DEATH !

Mon, 06/16/2014 - 12:56 | 4861653 boeing747
boeing747's picture

Money piles on ERX and USO.

Mon, 06/16/2014 - 12:47 | 4861617 Comte d'herblay
Comte d'herblay's picture
".........yada....Oil Jump On Middle East “Powder Keg”, yada yada yada.....""

 

You can plug in that snippet of text and you will get 100 to 100th power of Google sites to view, dating from the day that Eve flaunted her bodacious Ta-Tas and told Adam he gets no more nookie until eats the apple.

These words have been written so many times during the last 2000 yrs, that you have to eventually understand that there is a "Coincidence of Interests" who have found a version of a perpetual motion machine, unaffected by the laws of Physics, gravity, Gresham, Marconi, Bell, Fleming, Salk, Pythagoras, Dr. Spock, Judge Judy, Father Sarducci, and Clem Kaddidlehopper.  

http://www.youtube.com/watch?v=kO8x8eoU3L4

 

http://www.youtube.com/watch?v=4F-jeIdQwKY

They are as permanent in the firmament as the Sun.

Mon, 06/16/2014 - 14:38 | 4861313 Obama_4_Dictator
Obama_4_Dictator's picture

I've been buying Gold for years.....I just joined this system where I get paid to buy gold and in 4-6 weeks it's free....in 12 weeks I will be making 2-3k a week jsut doing what I already do.....if you are interested let me know and you can join me.....the real deal

 

https://www.karatbars.com/landing/?s=ssorweid

Mon, 06/16/2014 - 20:12 | 4863359 SilverIsMoney
SilverIsMoney's picture

Seems like a huge scam...

Mon, 06/16/2014 - 21:04 | 4863516 Obama_4_Dictator
Obama_4_Dictator's picture

It's not a scam....as someone who has been buying gold for years...I see the opportunity to get paid to do the same thing....

Mon, 06/16/2014 - 21:09 | 4863535 SilverIsMoney
SilverIsMoney's picture

Do me a favor then and explain it to me without having to sign up and pay a one-time only fee to find out...

Mon, 06/16/2014 - 21:21 | 4863586 Obama_4_Dictator
Obama_4_Dictator's picture

Why don't you join the group (the 1st video on hte page really explains it well), it's not about signing people up for the one time fee (does nothign for me), it's about buying Gold and getting commisions to do it....I am more than happy to explain how it all works...my phone number in the group description....https://www.facebook.com/groups/375379895944717/

Mon, 06/16/2014 - 11:17 | 4861270 lakecity55
lakecity55's picture

Jump Bitchez!

And PMs, too!

(edit)

Just looked at Kitco; well, that surge did not last long, haha.

Mon, 06/16/2014 - 10:53 | 4861207 USA USA
USA USA's picture

Do these MORONS even look at a chart?????

FU Obummer

Tue, 06/17/2014 - 02:40 | 4864151 disabledvet
disabledvet's picture

Here's the super secret video feed of the super secret meeting the President just had with his super secret people who run the world:

https://www.youtube.com/watch?v=vkdH0nuDWX4

been cleared for viewing. been told to "keep it tight" that's all.

when i get more i'll make sure to pass it on.

Mon, 06/16/2014 - 10:43 | 4861177 RaceToTheBottom
RaceToTheBottom's picture

All FEDs will not end their fight with Gold, right up to their last breath.

Mon, 06/16/2014 - 10:20 | 4861093 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

those gains are being erased quickly. Non-event for gold. 

Mon, 06/16/2014 - 09:49 | 4860982 Bastiat
Bastiat's picture

A Cluster of central banks would NEVER work together to sell paper gold!

Mon, 06/16/2014 - 11:14 | 4861273 lakecity55
lakecity55's picture

Certainly not!
What a silly idea.

Mon, 06/16/2014 - 09:27 | 4860915 Seb
Seb's picture

0.x% is not a jump.

Mon, 06/16/2014 - 11:19 | 4861289 lakecity55
lakecity55's picture

A small leap?

(off the ledge).

Do NOT follow this link or you will be banned from the site!