Wednesday, 30th August 2006 (4046 views)

Escalating political tensions between the Iran, the United States and the United Nations has led investors to seek solace in gold stocks on markets around the world.

Traders are nervous that a simmering conflict between President Bush and the Iranian President Mahmoud Ahmadinejad could hit stock markets and have begun to show solidarity with the precious metal just as it fell to recent five-week lows this week (August 30th).

President Ahmadinejad also publicly challenged Bush to a debate on the issues currently causing conflict between the two nations and at the same time the Iranian head of state also reiterated his refusal to halt plans to enrich uranium.

A UN request made to the Middle Eastern nation to cease its programme of uranium manipulation by tomorrow (August 31st) has been ignored and since rejected.

"Ahmadinejad's refusal is bullish for gold,' Tobias Merath, a Credit Suisse analyst based in Zurich, told Bloomberg.

"Political concern is coming to the forefront again," he added, noting that this traditionally proved positive for the gold price.

In addition to the political unrest, oil is rebounding from recent lows and the price hikes in what is frequently referred to as 'Black Gold' is also good news for the precious metal as the two commodities' prices frequently correlate directly.

Gold was today trading at around $615 an ounce.

 

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