Gold prices jump to highest in six years

Marco Green
June 25, 2019

Spot gold was up 1.2% at $1,435.45 per ounce, as of 0438 GMT.

With the on-going United States dollars weakness and pessimistic trade/political plays providing background music to the yellow metal's surge to the multi-year top, the Gold prices are now taking the bids near $1426 during early Tuesday.

US gold futures rose 0.5% to $1,407.10 an ounce.

"We are just seeing continued improvement in sentiment built around the more dovish tone from central banks, but clearly the safe-haven buying has also picked up with the U.S. -Iran tensions escalating over the weekend", ANZ analyst Daniel Hynes said.

Investors are also looking to the G-20 summit this weekend where Presidents Donald Trump and Xi Jinping are scheduled to meet to discuss trade, although USA officials are downplaying expectations, insisting America wasn't prepared to compromise on demands for meaningful Chinese economic reforms. "At some point we might see a pullback as investors lock in profits". Another key event on traders' watchlist is Federal Reserve Chairman Jerome Powell's speech in NY later Tuesday, which will touch on monetary policy.

Bets for lower interest rates, weaker United States dollar and tensions in the Middle East are providing an ideal environment for gains in the gold prices, said Michael McCarthy, chief market strategist, CMC Markets.

A significant withdrawal by investors from the United States dollar, which intensified after last week's Fed policy meeting, "further adds to the glimmering gold market appeal", Innes added.

At the geopolitical front, the U.S. and Chinese leaders are to break the deadlocked trade negotiation during this week's meeting of 20 global leaders (G20) in Japan.

Chinese President Xi Jinping will attend the G20 summit in Japan this week, state-run Xinhua news agency said on Sunday, giving the first official confirmation of his attendance at a gathering where he is expected to meet Trump.

Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.37% on Monday, after posting their biggest percentage gain in almost 11 years on Friday.

Gold and bitcoin - both seen as safe haven assets - have been rallying in response to the rising tensions between the two nations.

Palladium rose 1.1% to $1,516.70 an ounce.

Other reports by Click Lancashire

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