More Sanctions on Iran Pushes Gold Prices to Six-Week High: GLD,SLV

On Monday, gold (NYSEARCA:GLD) futures for February delivery increased $14.30 to settle at a new six-week high $1,678.30 per ounce.  Meanwhile, silver (NYSEARCA:SLV) futures jumped 60 cents to settle at $32.27.  Both precious metals received support from a weaker U.S. dollar (NYSE:UUP) and new sanctions placed on Iran.

The U.S. dollar index, which places the greenback against a basket of six foreign currencies, declined from 80.34 to 79.65.  It is the first time in 2012 the dollar index declined below 80, which had been acting as support in previous months.

Investor Insight: Currency Wars Are Driving Gold and Silver Higher

In addition to oil sanctions, EU governments also agreed to freeze the assets of Iran’s central bank.  More importantly, it placed a ban on all trade in gold and other precious metals with Iran’s central bank and public entities.  “Today’s decisions target the sources of the finance for the nuclear program, complementing already existing sanctions,” the EU explained.  While the sanctions may be targeted at Iran’s nuclear financing, the move serves as a reminder to investors that precious metals are alternative reserve currencies used in the absence of the U.S. dollar.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) and the iShares Silver Trust (NYSEARCA:SLV) increased .49 percent.  Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY) and Barrick Gold (NYSE:ABX) climbed 2.09 percent and 1.44 percent, respectively.  Silver miners (NYSEARCA:SIL) such as First Majestic (NYSE:AG) jumped nearly 2 percent, while Endeavour Silver (NYSE:EXK) gained 1.5 percent.

Don’t Miss: Inflation Concerns Remain as Gold and Silver Climb Higher

Adding to the list of sanctions against Iran, the U.S. announced sanctions against Bank Tejarat, which is Iran’s third-largest bank.  According to the WSJ, it is the 23rd Iranian-linked financial institution blacklisted by the U.S. since 2006.  “Today’s action against Bank Tejarat strikes at one of Iran’s few remaining access points to the international financial system,” Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen explained.

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com