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Gold climbs as attacks on Saudi plants boost safe-haven assets

Gold climbs as attacks on Saudi plants boost safe-haven assets

Mubasher: Gold prices climbed on Monday as risk-on sentiment dropped after attacks on Saudi Arabia’s oil installations, pushing safe-haven demand higher, according to Reuters.

This came amid anticipation of clues on monetary policy easing from the meetings of major central banks, including the US Federal Reserve, due this week.

By 8:26 am GMT, spot gold jumped by 0.92% to $1,502.17 per ounce, while US gold futures climbed by 0.71% to $1,510.20 per ounce.

The attacks on Saudi oil facilities prompted a rotation of interests out of stocks and into safe-haven assets, according to OANDA analyst Jeffrey Halley.

The responsibility for the attack was claimed by Iran-aligned Houthi rebel movement, but a senior US official said that there was evidence indicating that Tehran was behind the attack, deteriorating its already strained relations with Iran.

Moreover, President Donald Trump said that the US was “locked and loaded” for a response to the attack.

It is worth noting that bullion is often viewed as an alternative investment at times of geopolitical and financial uncertainties.

Moreover, market participants are looking to the outcome of the US Fed and Bank of Japan’s (BoJ) policy meetings on Wednesday for clues on their future policy trajectory.

In the meantime, central banks worldwide are facing heightened pressure to launch monetary support weakening economies as the trade tensions between the US and China inflicted damage on trade and business morale.

The latest evidence was observed in gloomy data from China, with the industrial production growth hitting the slowest pace since 17 years and a half.

Lower interest rates usually support the metal and drag the US dollar, owing to reduced opportunity costs of holding non-yielding bullion.