Gold Surges as Pakistani Unrest Triggers Safe Haven Buying

Source: Mineweb.coáá(12/28/07)

Where this will take the gold price now is almost certainly upwards (although it can be very unpredictable). How far and how fast is what is fascinating the market now, but the degree of political instability in the region which the Bhutto assassination could portend, is likely to be with us for some time and the perception of the possible perils ahead for the West if things turn sour has to have an upwards impact on the gold price.


After a brief spurt following the news of the assassination of Benazir Bhutto in Pakistan, and then a brief fall back, gold took off again yesterday and today (Friday) as the ramifications of the killing began to sink in amongst those in the financial sector still at their desks - or without their Blackberries switched off for the holidays. At the time of writing gold had risen back to just short of $840 and looks poised to move higher threatening again the all time high of $850 within the next few days.

Pakistan is an absolutely vital state to have on-side in the US and NATO's continuing battle against the Taleban in Afghanistan, not to mention any unease that the country, which is due for a General Election in ten days time, is also a nuclear power in its own right, is an Islamic state, has a significant part of its population potentially in the Islamic fundamentalist camp and thus sympathetic to the Taleban and probably to Al-Qaeda as well.

...overall the assassination is definitely extremely unsettling politically in a very sensitive part of the world. The slightest possibility that nuclear-armed Pakistan might move towards the fundamentalist camp - fills Western politicians with dread, perhaps even more so than a Saddam Hussein with his seemingly fictitious weapons of mass destruction...

Where this will take the gold price now is almost certainly upwards (although it can be very unpredictable). How far and how fast is what is fascinating the market now, but the degree of political instability in the region which the Bhutto assassination could portend, is likely to be with us for some time and the perception of the possible perils ahead for the West if things turn sour has to have an upwards impact on the gold price. With $850 again in sight the probability that this will be breached in the next few days has to be high - and this time, unlike the last when the $850 peak was very shortlived, any upward move looks to continue well above this level and while $1,000 gold seemed quite a long way ahead only a few days ago, it seems much closer now.

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