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Gold price to rise as US gains Syria strike support
By Tanzeel Akhtar | Wed, 4th September 2013 - 13:09
Angelos Damaskos, chief executive of Sector Investment Managers and fund adviser to the £6.8 million MFM Junior Gold fund, says gold could rise to $1,500 (£961) an ounce as US political figures plan for a military strike on Syria.
Gold has continued to rise in August after hitting a low point earlier this year, at the time of reporting gold is at $1,400 an ounce.
Damaskos says following confirmation by United Nation (UN) inspectors that chemical weapons of mass destruction were used by the Assad regime, the threat of military intervention by the US and other UN members in Syria is unsettling the markets.
He explains the UN intervention in Syria could cause greater instability in the region, especially as Iran is its key ally.
Damaskos says: "We believe that the main drivers of the gold price in July and August were the rise in demand for physical bullion from Asian investors and a reversal of sentiment among holders of ETFs and other financial instruments."
He says: "Rising risks in the world's most prolific oil-producing region could cause investment flight to safe heavens, principally gold. The next phase of gold's rebound would be hitting $1,500 an ounce.
"At this level investor confidence should increase significantly as this is believed to be the average replacement cost of new production."
The MFM Junior Gold fund, which focuses on small-cap gold miners, over a one-year period, has fallen by 54.2% as at 4 September.
Damaskos highlights two main contributors to Junior Gold's portfolio performance for the month were Aureus Mining and Alexco Resources.