Tensions between the U.S. and Iran appear to be rising again after reports suggested that three Iranian Revolutionary Guard Vessels manoeuvred near a U.S. Navy ship.
The U.S. military has now warned Iran that armed vessels approaching within 100 meters of the U.S. Navy ships in the Persian Gulf region risk being "interpreted as a threat and subject to lawful defensive measures."
It follows comments from the U.S. President Trump warned last month that the U.S. Navy would “shoot down and destroy any and all Iranian gunboats harassing our ships at sea.”
There has been a history of conflicts between the United States and Iran in the past year or so.
Iran last year seized ships in the Persian Gulf and Gulf of Oman, which led to the United States accusing Iran of attacking several tankers in the region.
The US also blamed Iran for being behind an attack on a Saudi Aramco oil facility, while Iran shot down a U.S. drone it claimed was over its territory.
There was much push and pull between U.S. forces and Iran-backed Iraqi militias, leading to a U.S. drone strike in January killing IRGC commander Qasem Soleimani and a top Iraqi militia commander in Baghdad. In response, Iran launched ballistic missiles on an Iraqi base housing U.S. troops, which saw no deaths, however causing traumatic brain injury to more than 100 U.S. soldiers. Iranian officials have also repeatedly issued threats against U.S. warships in the region.
What does this mean for the market?
Markets do not like uncertainty, particularly on the geopolitical front, these types of situations tend to see Gold (XAU/USD) as a massive beneficiary. Given this has the potential again to reignite tensions between the two nations, it is something that can be an added fundamental factor to support the precious metal.
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