Mubasher: Gold prices climbed on Tuesday to more than seven-month peak as investors avoided riskier assets amid concerns about an escalation in trade tensions between the US and China.

Such worries mounted after the US Justice Department charged Chinese smartphone maker Huawei with fraud.

By 8:15 am GMT, US gold futures rose 0.31% to $1,313.30 per ounce, while spot gold climbed 0.35% to $1,307.90 per ounce, after hitting its highest since 14 June, 2018 at $1,306.43 per ounce.

“Investors are very cautious with many uncertainties on US-China trade talks and Brexit,” CMC Markets market analyst Margaret Yang told Thomson Reuters, adding that “Huawei is at the centre of dispute, creating very noisy background for the trade talks.”

The US on Monday charged Huawei, its CFO and two affiliates with bank and wire fraud to circumvent sanctions against Iran, escalating tensions with China.

“All these are making it more difficult for investors to judge the market’s direction [so] money is fleeing into assets such as gold, seeking safety,” Yang said.

Investors were worried that the charges could complicate high-profile trade talks which are set to kick off on Wednesday, 30 January, with Chinese Vice Premier Liu He meeting with US Trade Representative Robert Lighthizer and others.

The US dollar index, a tracker of the greenback against a basket of six major rivals, stood close to a two-week low. The gauge went down 0.05% to 95.6940.

In addition, the US Federal Reserve’s two-day policy meeting is set to begin later on Wednesday, where interest rates are expected to be maintained at their current levels.

The Fed raised interest rates four times last year, but several officials signalled that the central bank would be patient in its monetary tightening policy, citing the impasse over global trade, the US government shutdown and fading business and consumer sentiment.

The precious metal tends to gain on prospects of lower interest rates, which lower the opportunity cost of holding non-yielding bullion.