Mubasher: Gold prices went up on Tuesday, transcending their highest level in three months seen last session, as worries over a global economic downturn arising from the escalating trade conflicts and prospects of US rate cuts boosted demand for the safe-haven metal, Reuters reported.
By 8:09 am GMT, spot gold rose by 0.26% to $1,328.73 per ounce, beyond hitting $1,327.90 per ounce, its highest since 27 February, while US gold futures climbed by 0.42% to $1,333.50 per ounce.
“Weak sentiment around the breakdown in US-China trade relationship has seen investors seek safe-haven assets,” Australia and New Zealand (ANZ) bank analyst Daniel Hynes was quoted by Reuters.
A slump in equities and expectations of interest rate cuts by the US Federal Reserve “has seen gold come to fore, which has driven investors back to the gold market,” Hynes said.
US Secretary of State Mike Pompeo said on Monday that Washington pushes to “level the playing field” with China after decades of unfair trade practices.
The protracted trade conflict between the world’s biggest two economies has taken a heavy toll on risk sentiment in financial markets. Global stock markets lost more than $2 trillion in value last May.
Global trade uncertainty is “likely to drive gold higher over the near-term, with initial targets extending toward $1,330 and beyond the February high of $1,346.80,” a note by MKS PAM Group was quoted by Reuters.
The dim global economic outlook led investors to raise their wagers that the Fed would cut interest rates sooner than expected.
It is worth noting that lower interest rates mean more support to gold, as they lower the opportunity cost of holding the non-yielding yellow metal.