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Gold hovers below 6-yr high; trade disputes boost safe-haven demand

Gold hovers below 6-yr high; trade disputes boost safe-haven demand

Mubasher: Gold traded below its six-year peak on Tuesday amidst higher safe-haven demand resulting from the escalation of a prolonged trade conflict between the world’s two biggest economies after the US branded China as a currency manipulator, Reuters reported.

By 8:29 am GMT, spot gold went down by 0.16% to $1,461.42 per ounce, having earlier hit $1,474.81 per ounce, the highest level since May 2013, while US gold futures fell by 0.27% to $1,472.50 per ounce.

An escalation in the protracted trade conflict between the US and China, cause turbulence in financial markets worldwide, while it boosted risk-off sentiment.

“The market sell-off could still see another major push lower and that will likely be the catalyst to take gold above $1,500 an ounce,” OANDA senior market analyst Edward Moya was quoted by Reuters.

US Treasury Secretary Steven Mnuchin on Monday said that Washington established that Beijing was manipulating the Chinese yuan (CNY).

This came after the Chinese currency plunged beyond the key CNY 7 level against the US dollar for the first time in more than a decade, preceded by President Donald Trump’s decision to slap 10% tariffs on an additional $300 billion worth of Chines goods.

The US administration intends to engage with the International Monetary Fund (IMF) to “eliminate the unfair competitive advantage created by China’s latest actions,” Mnuchin said.

Adding to the gold’s bullish run was a drop of the dollar to a two-week low, while the US Treasury yields recorded their biggest decline in 14 months.

At 8:37 am GMT, the US dollar index, a gauge for the greenback against a basket of six major currencies, stabilised at 97.52.