Gold hits high as trade wars push investors towards safe havens
Spot gold rose almost 1% higher to $1,317.53 an ounce on Monday
Bengaluru — Gold prices rose on Monday to their highest in more than two months on worries that US-Chinese trade tensions and Washington’s threat of tariffs on Mexico would hurt the global economy.
Spot gold rose almost 1% higher to $1,317.53 an ounce at 12.07pm GMT, after touching its highest since March 27 at $1,318.10.
US gold futures rose 0.9% to $1,322.40 an ounce.
Ross Norman, CEO at Sharps Pixley, said concerns over tariffs had driven investors to safe havens.
“Gold has also cruised pretty seamlessly across important levels such as $1,293 and $1,300,” he said, adding that crossing these technical barriers boosted the metal’s momentum further.
US-Chinese relations slid further downhill when the two countries clashed at the Shangri-La Dialogue in Singapore due to security disputes over Taiwan and the South China Sea.
US stock futures, Asian and European share markets and oil prices slipped to multi-month lows on Monday as investors turned to government bonds, the yen, the Swiss franc and gold.
Factory activity contracted across Asia and Europe last month as the trade row between the US and China raised fears of a global economic downturn and heaped pressure on policymakers to roll out more stimulus.
The gloomy outlook prompted traders to increase bets that the US Federal Reserve would cut interest rates sooner rather than later.
“Gold finally behaved like a safe haven last week, breaking out higher after the trade-war escalation led to a code red for global growth,” Edward Moya, senior market analyst at Oanda, said in a note.
Gold prices surpassed the key $1,300 level for the first time since April on Friday after being stuck in a nearly $20 range for weeks.
Hedge funds and money managers increased their net long positions in Comex gold in the week to May 28, data showed.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.32% to 743.21 tons on Friday from Thursday.
Spot gold may test a resistance at $1,315 an ounce, a break above which could lead to a gain into the range of $1,321-$1,330, according to Reuters technical analyst Wang Tao.
In other precious metals, silver rose 0.9% to $14.70 an ounce. The metal touched an almost three-week high of $14.72 earlier in the session.
Palladium rose 1% to $1,338.35 an ounce, while platinum was 1.5% higher at $803.65 an ounce, having touched a one-week high at $806.33 earlier in the session.