<p>Very unlikely. Terrorism events are not economically significant enough to move a commodity like gold.  In fact, terrorist attacks only effect markets if they are likely to lead to a major economy entering a full-scale war like it was after 9/11, 2001. The cost of terrorism, while at historical height, is still very small to effect the markets significantly: <a href="http://fortune.com/2015/11/17/terrorism-global-economic-cost/" rel="nofollow">http://fortune.com/2015/11/17/terrorism-global-economic-cost/</a>. Even economy of a country like France that have been recently hit by a terrorist attack is not likely to be affected by it too much. Politicians may exploit the terrorist attack to push their agenda though, which may have negative effects on the economy, like this articles argues: <a href="http://www.marketwatch.com/story/frances-real-challenge-is-growing-stagnant-economy-not-fighting-in-syria-2015-11-19" rel="nofollow">http://www.marketwatch.com/story/frances-real-challenge-is-growing-stagnant-economy-not-fighting-in-syria-2015-11-19</a>.</p>

<p>Yet, gold is a very volatile market and the price of gold can move a lot in any direction for no obvious reason. Purchases and sales of gold by central banks and institutional investors often go unannounced.</p>

<p>Another thing you should keep in mind if you want to speculate on the rate hike is that some big players may be waiting for that moment to BUY gold in large amounts, because that is when they can expect the most people placing sell orders. In that case the price of gold can jump contrary to expectations.</p>

CC BY-SA 3.0
2015-11-26T14:41:40.007Z
Big players collude with each other...
Deer Hunter
CC BY-SA 3.0
2015-11-26T04:48:30.967Z
2015-11-26T04:48:30.967Z
Arthur Tarasov
<p>Terrorism is noted to have an impact on the performance of several major economic and financial indicators, at least in "small" countries like <a href="http://www.rafieldor.co.il/PDF/Financial%20markets%20and%20terrorism.pdf" rel="nofollow">Israel</a> or <a href="http://www.nyu.edu/gsas/dept/politics/faculty/beck/abadie_aer.pdf" rel="nofollow">Spain</a>.  The idea that it could influence the price of gold is not unreasonable.</p>

<p>I note that the physical consequences of terrorism are relatively small and localized in terms of physical and human capital- not to diminish the loss of those who suffered. I simply mean they are small in comparison to say, the broad and sweeping consequences of a simple 1% change in US interest rates.  However, consider that the reaction in financial markets could be composed of a combination of the following: </p>

<ol>
<li>Terrorist attacks function as a signal that safety and security
of capital is lower than previously believed. </li>
<li>Humans may have behavioral tendencies to overreact to large, public events.</li>
</ol>

<p>It is not surprising, therefore, to see movement of human, physical, and financial capital in response to terrorist attacks being realized.</p>

CC BY-SA 3.0
2015-12-03T19:24:54.247Z
2015-12-03T19:36:36.273Z
2015-12-03T19:36:36.273Z
RegressForward
<p>With the Federal Reserve set to review interest rates next month, the price of gold may very well drop if they increase it. But with the current prevalence of terrorism and insecurity, is the price of gold likely to be affected (increase/decrease)?</p>

CC BY-SA 3.0
2015-11-26T04:04:17.233Z
Hi. This question is a little broad. Why are you concerned about the price of gold and terrorism of all things, and what does the Federal Reserve have to do with that? Are you just asking what the net effect will be on the price of gold due to the Federal Reserve's and "terrorism's" actions? I say the question is broad because it's going to invite a lot of speculation.
Kitsune Cavalry
<interest-rate>
Gold Prices and Terrorism
Darshan
# Gold Prices and Terrorism

(Asked by: username_0 on 2015-11-26)

With the Federal Reserve set to review interest rates next month, the price of gold may very well drop if they increase it. But with the current prevalence of terrorism and insecurity, is the price of gold likely to be affected (increase/decrease)?

**Tags:** interest-rate
> **Comments:**
> **username_1**: Hi. This question is a little broad. Why are you concerned about the price of gold and terrorism of all things, and what does the Federal Reserve have to do with that? Are you just asking what the net effect will be on the price of gold due to the Federal Reserve's and "terrorism's" actions? I say the question is broad because it's going to invite a lot of speculation.  

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## 2 answers

### Answer by username_2 on 2015-11-26. Score: 1 | Accepted answer

Very unlikely. Terrorism events are not economically significant enough to move a commodity like gold. In fact, terrorist attacks only effect markets if they are likely to lead to a major economy entering a full-scale war like it was after 9/11, 2001. The cost of terrorism, while at historical height, is still very small to effect the markets significantly: <http://fortune.com/2015/11/17/terrorism-global-economic-cost/>. Even economy of a country like France that have been recently hit by a terrorist attack is not likely to be affected by it too much. Politicians may exploit the terrorist attack to push their agenda though, which may have negative effects on the economy, like this articles argues: <http://www.marketwatch.com/story/frances-real-challenge-is-growing-stagnant-economy-not-fighting-in-syria-2015-11-19>.

Yet, gold is a very volatile market and the price of gold can move a lot in any direction for no obvious reason. Purchases and sales of gold by central banks and institutional investors often go unannounced.

Another thing you should keep in mind if you want to speculate on the rate hike is that some big players may be waiting for that moment to BUY gold in large amounts, because that is when they can expect the most people placing sell orders. In that case the price of gold can jump contrary to expectations.

> **Comments:**
> **username_3**: Big players collude with each other...  

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### Answer by username_4 on 2015-12-03. Score: 0

Terrorism is noted to have an impact on the performance of several major economic and financial indicators, at least in "small" countries like [Israel](http://www.rafieldor.co.il/PDF/Financial%20markets%20and%20terrorism.pdf) or [Spain](http://www.nyu.edu/gsas/dept/politics/faculty/beck/abadie_aer.pdf). The idea that it could influence the price of gold is not unreasonable.

I note that the physical consequences of terrorism are relatively small and localized in terms of physical and human capital- not to diminish the loss of those who suffered. I simply mean they are small in comparison to say, the broad and sweeping consequences of a simple 1% change in US interest rates. However, consider that the reaction in financial markets could be composed of a combination of the following:

1. Terrorist attacks function as a signal that safety and security
   of capital is lower than previously believed.
2. Humans may have behavioral tendencies to overreact to large, public events.

It is not surprising, therefore, to see movement of human, physical, and financial capital in response to terrorist attacks being realized.


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