Gold bars. File photo/ Reuters
Gold prices rose on Monday to their highest in more than two months as heightened Sino-US trade tensions and Washington's threat of tariffs on Mexico stoked worries of a global recession and drove investors to seek refuge in safe-haven bullion.
Spot gold was up 0.5% at $1,311.24 per ounce at 0627 GMT, after touching its highest since March 27 at $1,312.60.
US gold futures rose 0.4% to $1,316.20 an ounce.
“We are seeing a lot of traditional safe-haven hedging ... coming back to the fray,” said Stephen Innes, managing partner, SPI Asset Management.
“(Equity) markets seemed to be a little bit complacent. What caught them off-guard was Trump doubled down, signalling that (dealings between countries) on the trade war front is going to be quite aggressive.”
US stock futures, Asian share markets and oil prices slipped to multi-month lows on Monday amid the mounting trade worries.
Tensions between the United States and China escalated during the weekend as the two countries clashed over trade, technology and security.
“(Gold) markets are underpositioned and that's why we are seeing investors aggressively chasing prices. There are bets getting placed on a more aggressive rate cut, another reason why we are seeing prices moving higher,” Innes said.
In a sign that Sino-US frictions are putting a big strain on the global economy, South Korea's exports fell 9.4 percent in May, worse than a median forecast for a 5.6 percent decline, official data showed on Saturday.
The gloomy outlook has prompted traders to increase bets that the US Federal Reserve will cut interest rates sooner rather than later.
“Gold finally behaved like a safe haven last week, breaking out higher after the trade war escalation led to a code red for global growth,” Edward Moya, senior market analyst at OANDA, said in a note.
Gold prices surpassed the key $1,300 level for the first time since April on Friday after being stuck in a nearly $20 range for weeks.
Hedge funds and money managers increased their net long positions in COMEX gold in the week to May 28, data showed.
Indicating improved investor interest in gold, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.32 percent to 743.21 tonnes on Friday from Thursday.
Spot gold may test a resistance at $1,315 per ounce, a break above which could lead to a gain into the range of $1,321-$1,330, according to Reuters technical analyst Wang Tao.
In other precious metals, silver edged up 0.2% to $14.59 per ounce; platinum rose 1% to $799.25 per ounce, after falling last week to its lowest level since Feb. 15 at $784.42; and palladium rose 1.1% to $1,338.24 per ounce.
Domestic gold prices in India jumped to a record following an unexpected increase in import duty in the country’s budget, hitting demand and forcing dealers to offer the highest discount in nearly three years.
Trade anxiety and escalating tensions between the United States and Iran sent gold soaring to a six-year high on Tuesday, and saw traders dive back into safe-harbour government bonds and the yen and Swiss franc at the expense of the dollar.
Gold prices rose on Thursday, drawing closer to their highest levels this year on increased expectations of a US rate cut, even as some investors locked in profits from bullion’s recent rally.
European and US stock markets slumped on Friday as investors dwelled on the prospect of rising US interest rates. Europe’s main bourses all fell nearly two per cent.
HSBC has agreed to sell its French retail bank to Cerberus-backed My Money Group in a deal which will mean a loss of around $2.3 billion for the British bank but end its long struggle to dispose of the business as it focuses on Asia.
Sharjah Islamic Bank (SIB) has opened its newest branch in Abu Dhabi Mall. The decision serves as a key step forward in strengthening the bank’s network in the UAE and reach its growing customer base in the capital city.
Bilateral trade between UAE and Malaysia grew 26.52 per cent to $1.97 billion (Dhs7.25 billion) in the first quarter of 2021, compared to from $1.56 billion (Dh5.73 billion) in the corresponding period last year, reflecting the resilience in two-way trade.