Gold climbs to four-month high

Bengaluru — Gold prices climbed to a four-month high on Friday, as tension mounted in the Middle East after a senior Iranian military official was killed in a US air strike, while a weaker dollar also provided some support to the metal.

Iranian major-general, Qassem Soleimani, head of the elite Quds Force, and top Iraqi militia commander Abu Mahdi al-Muhandis were killed in the air strike on their convoy at Baghdad airport, the Pentagon said.

“News from the Middle East along with some technical buying and a weaker dollar is supporting gold prices today,” said Benjamin Lu, analyst at Phillip Futures.

Spot gold hit its highest since September 5 at $1,540.48 and was up 0.6% at $1,538.42/oz by 2.50am GMT. US gold futures gained 0.9% to $1,541.20/oz.

For the week, spot gold has gained 1.9%, heading for a fourth consecutive weekly increase. Gold is considered to be a safe investment at time of political and economic uncertainties. Supporting the metal further, the dollar index was down for the second consecutive week against a basket of rivals, making gold cheaper for holders of other currencies.

“If gold prices can sustain the $1,540 level today, then investors will be bullish at least for the short term, but given that the global economy is strengthening, we might see bullion prices soften a bit over the first quarter of 2020,” Lu said.

Bolstering the hope for a stronger US economy, the number of Americans filing claims for jobless benefits edged lower last week, a positive signal for the US labour market amid recent signs that new claims may be trending slightly higher.

China’s central bank on Wednesday said it was cutting the amount of cash that all banks must hold as reserves, releasing about 800-billion yuan ($114.91bn) in funds to shore up the slowing economy. Investors now await the minutes of the Federal Reserve’s December 10-11 policy meeting, due at 7pm GMT.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion. Indicative of investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.23% to 895.30 tonnes on Thursday, its highest since November 29.

Among other precious metals, silver rose 0.5% to $18.11/oz, while platinum gained 0.3% to $981.43, after a 3% jump in intraday trade on Thursday. Palladium climbed 0.3% to $1,964.87/oz.

Reuters