Gold rises to near six-year highs on US-Iran tension and central bank rate signals

Bengaluru — Gold climbed back towards the previous session’s near six-year high on Monday, driven by dovish signals from global central banks and increased tensions between the US and Iran.

Spot gold was up 0.7% at $1,408.65 an ounce by 11.20am GMT, heading for a fifth straight session of gains. Gold prices hit $1,410.78 on Friday, their highest since September 4 2013.

US gold futures rose 0.9% to $1,412.70 an ounce.

“The weakness of the US dollar, gold’s technical picture and interest from investors themselves have become self-sustaining factors, especially after the massive inflows into gold exchange-traded funds,” Commerzbank analyst Eugen Weinberg said.

Tensions between the US and Iran also supported gold, he added.

Holdings of the world’s largest gold-backed ETF, SPDR Gold Trust, rose 4.6% on Friday from a day earlier, its biggest one-day percentage gain since September 2008.

The US Federal Reserve and the European Central Bank last week hinted that they were open to easing policy to counter a global economic slowdown, exacerbated by global trade tensions.

Helping gold’s appeal, the dollar fell to a three-month low against a basket of currencies on bets the US central bank would start lowering interest rates as early as next month.

Meanwhile, US President Donald Trump said on Sunday he was not seeking war with Tehran, but tensions remain high between the longtime foes, with Washington due to announce “significant” sanctions on Iran on Monday.

Gold prices have risen nearly 8% so far this month, and more than $70 just over the past week.

Hedge funds and money managers boosted their bullish stance in Comex gold in the week to June 18 and speculators switched to a net long in silver futures and options, the US Commodity Futures Trading Commission said on Friday.

Gold holding above the psychologically important $1,400 level is a positive signal for consolidation after last week’s rally, said Carlo Alberto De Casa, chief analyst at ActivTrades.

“The gold rally pushed silver up too, but the scenario in this case is less strong, as prices keep bouncing on the resistance area at $15.50,” he said.

Silver edged 0.1% higher to $15.37 an ounce and platinum was up 1.1% at $815.

Palladium rose 0.9% to $1,516.02 an ounce.

The market’s focus now shifts to whether Washington and Beijing can resolve their trade dispute at a summit in Japan this week of leaders from the G20 leading world economies. 

Reuters