LONDON (Commodity Online): Tensions between the West and Iran may be escalating and this could be bullish for gold prices, said HSBC in a research note.
According to HSBC, elections are slated for March 2 in Iran, the first presidential votes since 2009, when Ahmadinejad’s reelection triggered months of riots. Gold prices rose during that time.
Western sanctions are beginning to impact economic activity as media reports say that Iran had to cancel grain purchases because of a lack of foreign exchange. The media reports note Iran offered gold stored overseas or oil in return for food. More sanctions may come if the U.S. sanctions Iran’s main tanker group, the privately run National Iranian Tanker Company, or on the state-owned National Iranian Oil Company.
“Even if there is no physical disruption in oil supplies, the conflict between the West and Iran could constrict global oil supply at a gradual pace similar to that seen during last year's Libyan civil war, according to the International Energy Agency's Deputy Executive Director Richard Jones. There is a positive correlation between oil and gold during periods of high oil volatility,” HSBC concluded.
