“Protection Asset” will rise in price

Military conflict in Syria will heat the interest of investors in precious metal. Such opinion was expressed by Maria Salnykova, expert of information and analytical center FOREX CLUB Ukraine. In the event of military action in Syria, according to experts, the prices for gold on the world market may rise by eight percent to 1,517.6 US dollars per ounce. In such case, the cost of one gram of gold in Ukraine may rise to 403 hryvnias.

“Gold is now experiencing the period of volatility, but the overall demand for the metal as a protective asset is increasing in the world. The demand for gold in the second quarter from investors has increased by 25.8 percent to 370.7 tons and from industry – by 4 percent to 679.8 tons,” said Salnykova.

The share of gold in the gold reserves of the countries in euro area remains at the level of 12-15 percent, while in the developing countries it is below the 10 percent mark, which suggests that central banks will continue to buy the metal in the long term perspective. Traditionally, the investments in gold increase during an outbreak of hostilities. The press service of FOREX CLUB in Ukraine reports that during the war in Iraq in April-May 2003 the price for gold went up by 8.05 percent to 364.35 US dollars per troy ounce.

Also, according to ITAR-TASS, the conflict in Syria inflates the price of oil. Experts predict that oil price will rise to 125 US dollars per barrel if the West attacks Syria. Speaking about how the situation will affect the oil profits of countries that produce “black gold,” the former vice-president of Kuwait Energy Company Abdul Samee Behbahani stressed that most members of the Organization of Petroleum Exporting Countries will experience serious losses, especially if Iran takes direct part in the conflict. Prices will go up rapidly, since energy resources and their reserves will be in great demand. In case if the US conducts ground campaign, the price per barrel could rise to 200 US dollars.

Reuters, referring to the expert report from Morgan Stanley, wrote about the increase in the rate of the US dollar in international financial markets, also caused by the conflict in Syria. At the end of the last week the US currency rose from a minimum of two weeks to the level of yen and then to the Swiss franc because traders consider it the most reliable currency in the light of possible military action of the West against Syria. It is stressed that the dollar rose by 0.5 percent to 97.47 yen after recovering from the value of 96.81 yen – the minimum of August 12. The dollar also went up against the Swiss franc by 0.2 percent to 0.9190 franc. “The yen and the Swiss franc had the support by the demand for safe currency because of the situation in Syria, but I think that soon we will observe strong growth in the price for dollar,” said Ian Stannard from Morgan Stanley.