Gold Rises to 3-Week High as Iraq Crisis Spurs Buying

Gold advanced to a three-week high as unrest in the Middle East spurred demand for a haven.

U.S. President Barack Obama authorized air strikes in Iraq and Russia banned agriculture imports from the U.S. and European Union in retaliation over sanctions stemming from the conflict in Ukraine. Israel said a cease-fire with Hamas forces in Gaza was violated hours before it was due to expire.

“Pretty much a perfect storm for gold prices,” David Govett, head of precious metals at Marex Spectron Group in London, said in a note today. “Resolutions seem a long way off. It is going to be all about headlines today.”

Gold for December delivery increased 0.6 percent to $1,319.70 by 7:10 a.m. on the Comex in New York on trading that was 85 percent higher than the 100-day average for this time of day, data compiled by Bloomberg show. Prices touched $1,324.30 an ounce, the highest since July 18. Bullion for immediate delivery rose 0.5 percent to $1,318.58 an ounce in London, according to Bloomberg generic pricing.

Fighting in Ukraine and the Middle East sparked a 9.7 percent rise in gold this year, with prices up 1.9 percent this week, heading for the first weekly gain in four weeks.

“Obama authorizing air strikes against Iraq is likely to increase the risk-aversion in the market place and send gold prices higher,” Howie Lee, a Singapore-based investment analyst at Phillip Futures Ltd., said in an e-mail. “Risks are now tilted to the upside.”

Bullion priced in euros reached the highest since March 17 today. The metal denominated in pounds climbed to the highest since April 15.

Silver for September delivery advanced 0.6 percent to $20.1 an ounce. Prices are heading for a fourth weekly drop, the longest streak since Nov. 22.

Platinum for October delivery climbed 0.2 percent to $1,484.10 an ounce and palladium for September delivery increased 0.7 percent to $861.90 an ounce. (Bloomberg)