Ira Epstein, director of the Ira Epstein division of The Linn Group, says concerns about Iran and a bounce in the euro are lifting gold at the moment.
European officials meet to decide on a formal embargo against Iranian oil later this month, and U.S. and other NATO member warships are near the Strait of Hormuz, he points out. There is potential for a military confrontation if Iran tries to close the Strait. “The threat of all this is enough to enough to keep crude oil and gold prices bid higher,” Epstein says. Meanwhile, Epstein suggests the euro may have gotten “a bit too cheap” around the $1.2650 level against the U.S. dollar. While he expects the euro to go under $1.20 in the longer term, he also envisions a euro bounce to the $1.2950-$1.3000 area. “This implies a lower U.S. dollar index, which would be beneficial to gold,” he says. As a result, for now, “gold has Iran along with a stronger euro currency behind the current price rally.”