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Gold records 6-yr peak on trade, global growth jitters

Gold records 6-yr peak on trade, global growth jitters

Mubasher: Gold climbed on Monday, after hitting earlier in the session its highest level in more than six years, as the trade conflict between the US and China escalated and concerns mounted over a sluggish global economic growth, boosting safe-haven sentiment, Reuters reported.

By 10:23 am GMT, spot gold climbed by 1.14% to $1,457.23 per ounce, after reaching $1,459.47 per ounce, the highest level since May 2013, while US gold futures rose by 0.78% to $1,468.90 per ounce.

US President Donald Trump last week said he would levy an additional 10% tariff on $300 billion in Chinese goods, to which China responded on Friday with a vow to fight back.

 “Gold is certainly benefiting from the global concerns about the outlook for growth, and central banks are likely to maintain their accommodative stance, so safe-havens like gold are in demand,” CMC Markets chief strategist Michael McCarthy said.

Trump’s tariff decision may prompt the Federal Reserve to slash interest rates more than it had expected to immune the US economy from trade-policy risks.

In the same vein, recent economic figures underpinned expectations that the Fed would cut borrowing costs again next September, after delivering its first cut in more than a decade.

It is worth noting that lower interest rates reduced the opportunity cost of holding non-yielding metal and drag the US dollar down.

Boosting the bullion’s allure was the dollar hitting a one-week trough hit, making the yellow metal more affordable for non-US currency holders.

By 10:28 am GMT, the dollar index, which tracks the US currency against six major peers, fell by 0.28% to 97.80.

A gloomy outlook for global economic growth was further cemented with estimates showing Chinese services sector growing at the slowest momentum in five months last July.