The price of Oil jumped yesterday, following confirmation that United States President Barack Obama authorized air strikes against Islamic militants in northern Iraq.
Confirmation that the Iraq conflict has now escalated to the northern area of country is nearly certain to continue having an impact on the price of oil.
It has been suggested that the Northern area of Iraq holds the countrys highest oil reserve (up to 70% reportedly) and it was actually debated before whether oil might have been overbought when the violence was not occurring in the area of the country, where the largest oil reserves are located.
Now that the conflict is spreading into the northern part of Iraq, investors will be prudent to keep a very close eye on the fluctuation of Oil’s price.
In reference towards what impact last night’s air strike will have on Gold, I remain unsure. Gold only appreciated by around $10 yesterday and despite geo-political tensions dominating the news headlines since early July, bullish gains have been very limited.
If the United States, or any other major political/economic power announced further intervention (sending troops to one of these problem areas), then this is where I would expect Gold to surge.
Until then, Oil seems to be a far more serious contender for a bull run at present.