Mubasher: Gold prices climbed more than 1% earlier on Friday, as a raft of weak economic figures from both the US and China and geopolitical tensions in the Middle East boosted safe-haven appetite, according to Reuters.
At 7:49 am GMT, spot gold climbed by 1.01% to $1,355.49 per ounce, having earlier touched $1,358.04 per ounce, the highest level since 11 April last year, while US gold futures jumped by 1.2% to $1,359.50 per ounce.
By 9:08 am GMT, spot gold rose by 0.79% to $1,352.96 per ounce, while US gold futures climbed by 1.05% to $1,357.80 per ounce.
Gold has gained 1.1% far this week, sending the yellow metal on course for its fourth weekly win in a row, Reuters said.
“When the markets start waxing bearish economic data, it’s the global recession they are concerned about, triggered by escalation of trade war,” SPI Asset Management managing partner Stephen Innes was quoted by the news agency.
China’s industrial output growth recorded its slowest level in 17 years, adding another sign of a faltering demand as the US steps up trade pressure on the world’s second biggest economy.
“If we have world’s second-largest economy struggling, arguably we also have the US struggling, this is bad and we know we are one step away from recession,” Innes said.
The impact of the full-blown trade war has been felt in the US labour market, with the number of people filing for unemployment benefits over the last week rising.
In addition, the latest disappointing economic readings from the US have built the case for an interest rate cut by the Federal Reserve.
Fed’s rate-setting meeting is due to be held on 18 and 19 June.
A lower interest rate would mean more support for gold, as the opportunity cost of holding the non-yield bullion.
In addition, “with geopolitical risk premium ratcheting higher on the back of Middle East tensions and autonomy protest in Hong Kong, gold represents dependable insurance against those mounting geopolitical risks,” Innes said.
Washington accused Tehran of carrying out the attacks on two oil carriers in the Gulf of Oman, stoking worries over a new confrontation between the US and Iran.
Violent clashes erupted in Hong Kong between demonstrators and police on Thursday as hundreds of people gathered in protest to a planned extradition law with China.
