Mubasher: Gold prices climbed on Tuesday, exceeding their highest level since more than six years, as worries mounted over Hong Kong protests and plunge in Argentine currency amidst fears of global economic slowdown driving investor appetite towards safe-haven assets, according to Reuters.
By 11:21 am GMT, spot gold jumped by 1% to $1,526.33 per ounce, having passed beyond $1,521.98 per ounce, its highest since April 2013, while US gold futures climbed by 1.38% to $1,538.10 per ounce.
“It is a pretty straight forward case of risk aversion[with] crisis in Argentina and political deterioration in Hong Kong underlying all of this,” amidst a slowdown in global economy, DailyFx senior currency strategist Ilya Spivak was quoted by Reuters.
Thousands of protesters blocked Hong Kong airport, the world’s busiest cargo airport, on Monday, paralysing operations, after demonstrations objecting to an extradition bill to mainland China have turned into wider demands for democracy.
Moreover, worries about a possible return to interventionist policies hit the Argentine market after President Mauricio Macri suffered a mauling in presidential preliminaries.
These developments were accompanied with fears of the protracted trade tussle between the US and China, unnerved financial markets.
In the current moment, market focus is turning to the Federal Reserve’s annual symposium next week. Investors were seeing a 74% possibility of a 25 basis-point (bp) rate cut by the US central bank next September.
Lower interest rates are usually supportive to gold, as they reduce the opportunity cost of holding non-yielding bullion and drag the dollar down, making the yellow metal more affordable for non-US currency holders.
“Gold prices must hold above $1,500 for an extension of the bullish wave in the current term,” a note by brokerage Phillip Futures was quoted by the news agency.