July 4, 2020, 9:06

‘Gold Rush’: US-Iran Confrontation Sends Gold Prices to 6-Year High

‘Gold Rush’: US-Iran Confrontation Sends Gold Prices to 6-Year High

Fears of a military conflict between the Islamic Republic and the US flared up when Iran downed a US surveillance drone reportedly flying over one of its coastal provinces in the Strait of Hormuz. After the incident, Donald Trump said that the US was “cocked and loaded” for retaliatory strikes but he stopped the attack.

Gold prices have climbed up to a new six-year maximum amid the growing concerns over the conflict between the Middle Eastern regional power, Iran, and its superpower adversary from across the Atlantic, the US. The precious metal broke the 2013 high of $1,430 at the closure of Asian markets.

Gold topped record prices hot on the heels of US President Donald Trump signing an executive order to impose “hard-hitting” new sanctions, which target the country’s Supreme Leader Ali Khamenei and “those closely affiliated with him”, including 8 senior commanders in Iran’s Revolutionary Guard Corps. Trump said Khamenei was responsible for “the hostile conduct of the regime”. US Treasury Secretary Steve Mnuchin also promised to step up pressure with sanctions against Foreign Minister Javad Zarif and freeze Tehran’s access to billions of dollars in various assets.

In response, Iranian Foreign Ministry spokesman Abbas Mousavi indicated that Washington’s move meant the “permanent closure of the path to diplomacy”.

As AFP points out, the Iranian tweet prompted traders on Asian equity markets to sell, sending Hong Kong down by more than one percent and making Tokyo drop by 0.6 percent. At the same time, crude prices continue to fall despite the confrontation in the Middle East. As CMC Markets UK analyst David Madden explains “traders began to fear that demand for oil will fall”.

The new round of sanctions followed the downing of a US drone by the Islamic Revolutionary Guard Corps last week. Tehran insists that the UAV and P-8 Poseidon spy plane accompanying it had violated the country’s border, while US Central Command claimed that the drone was shot down while operating over international waters in the Strait of Hormuz.

Following the incident, Donald Trump announced that the US planned to retaliate with a military strike, claiming he called off the operation minutes prior to its start in order to avoid disproportionate casualties.

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