Gold prices surge as investors seek safe haven

The number of investors buying gold is on the increase as more people look to safe havens to counter recent geopolitical tensions.

Gold prices were moderately improved and reached three-week highs in the US on Monday (June 16), Forbes reports.

August Comex gold jumped US$7.50 to $1,281.60 an ounce, while spot gold was last quoted as $5 up at $1,281.50. July Comex silver last traded up $0.04 at $19.695 an ounce.

The move to gold was precipitated by rising tensions in Iraq. The Sunni rebel group claimed it had executed 1,700 Iraqi Shiite government soldiers, with the situation in the country said to have deteriorated over the weekend.

It has been reported that rebels captured Iraqi government military hardware, as well as hundreds of millions of US dollars held in Iraq’s central bank. Media sources also say the US may be reaching out to Iran in an effort to help deal with mounting tensions.

Similarly, problems in Russia-Ukraine relations are still damaging investor confidence in Europe. Russia has reportedly cut natural gas supplies to its neighbour and said it would only provide resources if the Ukraine paid up front.

Elsewhere, gold prices may continue to grow following a US Federal Reserve Open Market Committee meeting this week, which will include a press briefing by Fed Chair Janet Yellen.

At the meeting, the central bank is expected to continue tapering its bond-buying program. The Fed has made a number of $10 billion cuts to quantitative easing this year, bringing the monthly amount down from $85 billion to $35 billion.

Chicago Fed President Charles Evans this month suggested the central bank will continue to make cuts to the bond-buying program throughout 2014.

“The expectation is that tapering will be completed by the end of this year,” he explained to delegates at a conference in Istanbul.

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