Picture: REUTERS/MARIYA GORDEYEVA
Picture: REUTERS/MARIYA GORDEYEVA

Bengaluru — Gold scaled a six-year peak on Tuesday as a weaker dollar, prospects of monetary easing by the US Federal Reserve and simmering US-Iran tensions continued to stoke bullish sentiment in the market.

The precious metal has leapt 10% in four weeks, breaking above technical resistance that has thwarted every rally for half a decade to finally rise above $1,400.

Spot gold hit its highest since May 2013 at $1,438.63 earlier on Tuesday, before easing slightly to stand $1,429 an ounce by 11.46am GMT, up 0.7% on the day. 

The market is set for a sixth consecutive session of gains and has gained 9.6% so far this month. The metal has added about $100 in the past week alone. US gold futures jumped 1.1% to $1,436.20 an ounce.

“The market is still catching up after prices broke through the trading range that was in place for the last five years. We are seeing continued fresh buying coming into the gold market,” Saxo Bank analyst Ole Hansen said. “The fact that other precious metals are completely left behind indicates how there is a scramble to get into gold with lower rates, growth concerns and tensions in the Middle East.”

Last Wednesday, the US Federal Reserve signaed interest rate cuts beginning as early as July. The dollar index dipped to a three-month low on Tuesday, making bullion cheaper for investors holding other currencies.

US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions on Monday to increase pressure on Iran after Tehran’s downing of an unmanned American drone.

Indicating investor interest in gold, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), rose 0.37% on Monday, after posting their biggest percentage gain in nearly 11 years on Friday.

“We remain bullish towards price action with ETFs continuing to see inflow and the dollar continuing to falter. However, it is likely, following the recent run higher, that we will see a period of consolidation into the financial year end,” MKS PAMP said in a note. “Supportive interest should now sit around $1,420, with broad extension towards $1,400, while resistance is evident from $1,440 to $1,450.”

Investors are looking to whether Trump and Chinese President Xi Jinping will call a truce in their trade war at an expected meeting at the G20 summit in Osaka later this week.

Among other precious metals, silver was down 0.2% at $15.40 an ounce and platinum gained 0.4% to $813.30. Palladium fell 0.1% to $1,542 an ounce after hitting its highest since March 27 at $1,545.87 earlier in the session.

Reuters