Mubasher: Gold was heading for its biggest weekly gain since more than three years on Friday, as it traded above $1,500 per ounce amid escalating trade tensions between the US and China, according to Reuters.
By 11:54 am GMT, spot gold inched up by 0.04% to $1,501.57 per ounce remaining above the $1,500 per ounce level, which was hit earlier in the week, for the first time since April 2013, while US gold futures rose by 0.23% to $1,512.90 per ounce.
The yellow metal climbed by 4.3% until now this week, and by around 17% for the year, winning more than $100 in the past week.
“We don’t rule out technical corrections, but $1,500 is now the new normal unless trade relations take a turn in a right direction,” Mumbai-based Anand Rathi Shares & Stock Brokers commodities analyst Jigar Trivedi was quoted by Reuters.
Trade tensions between the world’s top two economies showed no signs of abating. US President Donald Trump announced last week that he would levy a 10% tariff on $300 billion in Chinese imports.
China’s government earlier in the week allowed the Chinese yuan (CNY) to tumble below the CNY 7-per-dollar level, while the US Treasury Department branded Beijing as a currency manipulator.
Along with a boost to the safe-haven sentiment, a dovish monetary policy by central banks worldwide are giving a push to the precious metal.
The central banks in New Zealand, Thailand, India and the Philippines slashed their key interest rates, reflecting growing worries over an economic downturn.
Moreover, federal funds future pointed to 69% expectations of a rate cut by the US Federal Reserve by at least 25 basis points (bps) next month.
The US central bank slashed its benchmark rate last July for the first time since more than a decade.
Lower interest rates usually lend support to the yellow metal, as they lower the opportunity costs of holding of non-yielding bullion, and drag the dollar down.
The greenback was on course for its first weekly drop in four, giving a boost to the gold’s appeal.
At 11:57 am GMT, the dollar index, which tracks the US currency against six major rivals, edged up by 0.07% to 97.55.
