Gold hits highest in over three months on expectation Fed will cut interest rate

The prolonged trade war between the two countries has roiled financial markets, denting risk sentiment among investors.

Elsewhere, data showed US manufacturing growth slowed in May to its weakest pace in more than two-and-a-half years, fuelling bets that the Fed may cut rates by the end of 2019.

On Monday, St Louis Fed president James Bullard conceded that risks to economic growth posed by trade tension may warrant a rate cut soon.

The news prompted US treasury yields to slip to their lowest since September 2017.

“The correction of the greenback has given a lift to bullion while the decline of US yields is another favourable element for the precious metal,” said ActivTrades analyst Carlo Alberto de Casa in a note.

Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 2.2% on Monday, their biggest one-day percentage gain since July 2016.

At these high price levels, “there will be some profit-booking, but the tone [for gold] is positive until $1,300 on the downside is breached”, Trivedi said.

Silver was down 0.3% at $14.73 per ounce, having touched a more than two-week high of $14.83 on Monday.

Platinum edged 0.1% lower to $820.13 per ounce after hitting a two-week high of $825.78, while palladium was nearly steady at $1,324.76 per ounce.

Reuters