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The Gold price reached its highest level in more than five months on Friday, after the U.S. military decided to fire missiles at a military airfield in Syria. The U.S. missile strike was in retaliation for a chemical attack that took place in Syria earlier this week. According to Trump, Assad is behind this attack, although no hard evidence has yet been provided.
The financial markets reacted nervously to the military intervention by the United States, fearing an escalation of the situation in the region. The Syrian government is supported by Russia and Iran, which means that there is a danger that these countries will be pitted against each other.
Globally, stock markets opened slightly lower on Friday, while the gold price shot up almost one percent to €1,190 per troy ounce and around €38,200 per kilogram. The price of gold in dollars also went up by one percent, before stabilizing at a level of around $1,265 per troy ounce.
Gold price to highest level in more than five months (Source: Goldprice.org)
The last time the price of gold reached this level in dollar terms was on November 10. In euros, the highest price was recorded since the end of September. Also, gold price broke through the 200-day moving average on Friday, which means that there is strong upside momentum at the moment. If the gold price closes at this level this week, it will be the fourth week in a row in which the price of the precious metal rises. Since the beginning of this year, gold has already risen almost 9% in price.
"There is clearly an element of risk aversion in the market, which is why people are buying gold. The precious metal had been close to the 200-day moving average for some time and needed a trigger to break through it. This could be the beginning of a new positive phase for gold.", analyst Georgette Boele of ABN Amro told Bloomberg.
The precious metal is traditionally a safe haven in uncertain times. This means that the gold price reacts not only to monetary policy and inflation expectations, but also to political and geopolitical risk. In addition to gold, the price of silver also went up. Silver prices rose 0.6% to $18.33 per troy ounce and around €554 per kilo. For silver, this is the highest level since the beginning of March.
The missile attack came as a surprise to many, because until recently the U.S. government communicated the position that it is up to the people of Syria to determine who should lead the country. But since the chemical attack earlier this week, Trump has completely revised his position and has been forced to intervene anyway.
Several Western allies have shown understanding for Trump's action, while Russia strongly condemned the missile attack. According to Putin, the attack violated international law and violated Syria's sovereignty.
