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.
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