Gold prices unlikely to settle as Iraq tensions escalate

Gold prices unlikely to settle as Iraq tensions escalate

With the turmoil in Ukraine almost gone from the headlines, gold's status as a hard asset and storer of wealth in times of trouble lost some of its shine.

But as Iraq spirals into all-out war and the US looks in danger of being pulled back into a conflict it has spent the last six years extricating itself from, gold is finding favour again.

Gold continued to gain ground against the US dollar during Friday's session and closed the week at $1276.68 an ounce, the highest level since May 28.

Bullion traders will continue to ride the golden roller coaster this week, with prices unlikely to settle. If anything, experts seem to agree, gold may be entering the best three-month stretch and they will continue to drift higher.

Gold enthusiasts will continue monitoring events in Iraq this week, since Shiite militias are now fighting alongside security forces against the militants, which has made the clash take on a strong sectarian dimension.

If the situation in the Middle East worsens, the yellow metal could get a new safe-haven boost that could take the price further higher.

Investors will also be looking to the Federal Reserve's Open Markets Committee, which meets Tuesday and Wednesday, and Fed chief Janet Yellen will speak afterward at a press conference. Nobody thinks the Fed will change much at this meeting, so all eyes are on the future.

Cover image: Iraqi army Emergency Services Unit soldiers, by specnaz.