The move by the US to launch an airstrike on Baghdad’s airport could be the spark of a major escalation. Gold may retrace slightly back to 1537, finding support before moving higher towards 1553.
- Gold spiked higher after US airstrikes in Iraq killed a top Iranian military commander Major-General Qassem Soleimani in his convoy at Baghdad International Airport.
- This attack came after the US had accused Soleimani of approving attacks on the US Embassy in Baghdad earlier this week.
- Iran’s Supreme Leader Ayatollah Ali Khamenei warned that a “harsh retaliation is waiting” for the US.
- The US airstrikes could draw forceful Iranian retaliation against US interest in the middle east and could spiral into a far larger conflict between the US and Iran.
- The dramatic attack comes at the start of 2020 in which Trump faces both a Senate trial following his impeachment by the US House and a re-election campaign.
- The market is already shifting into risk-averse assets with gold moving higher towards 1542 and oil prices jumping 260 pips today.
- We believe that oil prices still have room to move higher but a technical retracement back to 1537 could be in play before further upside can be seen.
Fullerton Markets Research Team
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