The surprise September 14 attack on Saudi Arabia’s oil production fields sent gold shooting higher, as investors sought a reliable safe haven.
GOLD WAS UP MORE THAN ONE PERCENT DURING THE FIRST TRADING DAY AFTER THE ATTACK.
Yemen’s Houthi rebels, backed by Iran, took credit for the attack that seriously crippled one of Saudi Arabia’s largest oil fields and the world’s largest crude oil processing facility, taking out more than half of Saudi Arabia’s oil production. Crude oil prices jumped as much as 19 percent in response, $12 a barrel for Brent Crude, a reaction that could drive upward inflationary pressure, even as the Saudis claimed they would be able to restore much of their production in a matter of months, in part by relying on reserves. Gold is often seen as a hedge against inflation.
Saudi Arabia said it held Iran responsible for the attacks. U.S. Secretary of State Mike Pompeo called the attack “an act of war,” after U.S. President Donald Trump, also blaming Iran, declared the U.S. was “locked and loaded,” prepared to respond. In response, Iran’s foreign minister pledged an “all-out war” if the United States or Saudi Arabia were to attack Iran. Trump Administration officials tried to tamp down talk of hostilities as they worked to build an international coalition that would prepare a response. But the possibility of a military conflict in the Middle East added to the appeal of gold, a safe store of value, particularly during times of political instability.
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