Gold spikes on rockets hitting Green Zone in Baghdad

• Gold prices pop on news of Katyusha rockets falling inside Baghdad's heavily fortified Green Zone.
• Markets expect that Iran and US to stick to their truce, while Iraq could now become the next flashpoint. 

Gold prices have popped on the news that three Katyusha rockets fell inside Baghdad's heavily fortified Green Zone causing a fire, Iraqi police sources told Reuters. Gold rallied from a low of $1,553 to a high of $1,562.11.

The news said that sirens were sounding inside the Green Zone, and at least one of the rockets fell 100 metres away from the US embassy. This comes on the same day that Iran and the US stepped back from the brink of war following Iran’s elite Revolutionary Guards launching its first retaliatory strike for the assassination of Qassem Soleimani in the dead of night with a barrage of ballistic missiles targeting US forces in neighbouring Iraq. What is expected, is that these latest attacks could well have come from the network of Iran-backed militias in Iraq, Syria, Lebanon and Yemen remain intact, and analysts believe hardliners will be empowered by the assassination of Soleimani.

Mohammad Javad Zarif, Iran’s foreign minister, tweeted that Tehran had taken “proportionate measures” in self-defence, adding that the Islamic republic did not “seek escalation or war”. Ayatollah Ali Khamenei, the supreme leader, spoke later to supporters, describing the missile attack on two bases in Iraq hosting US troops as a “slap” in the face for the Trump administration and demanded US forces leave the Middle East. 

American strength, both military and economic, is the best deterrent

President Donald Trump initially sent out a tweet yesterday noting that there had been no casualties, some hours after the reports which calmed markets concerns and set the stage for an address the following day. Markets priced out the risk of a US military response and today's address was a well balanced diplomatic approach to deescalating the tensions from Trump. “American strength, both military and economic, is the best deterrent,” Mr Trump said. Subsequently, gold priced fell to below pre-attack levels. 

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