Gold gains as trade tensions lift safe haven appetite
Aug 06 2019
$1,462 - per ounce, the price of gold on Tuesday after hitting its highest level since May 2013 at $1,464.60.
U.S. President Donald Trump tweeted last week to threaten imposing an additional 10 percent tariff on the remaining 300 billion U.S. dollars worth of Chinese imports starting on September 1.
New Delhi- Gold saw a sharp surge in demand as a safe haven asset which pushed the precious metal to an all-time high of Rs 37,347 per 10 grams on Monday amid growing trade tensions between United States and China.
Gold rose to a more than six-year high on Monday, gaining more than 1 percent, as an escalating trade conflict between the U.S. and China sent investors scurrying for the safety of bullion.
"What is driving gold is fear of these tariffs and the fear of China retaliating", said Michael Matousek, head trader at U.S. Global Investors.
"Gold is in a bull market and is going to trend higher".
As a result, December gold rose 1.75 percent last Friday.
Trump's tariffs on China may force the U.S. Federal Reserve to cut interest rates more than it had hoped was necessary to protect the economy from trade-related risks. "All this volatility, growth fears, persistent weakness in economic data will be good enough for risk-off environment", said Benjamin Lu, an analyst at Phillip Futures.
A lower yuan raises the cost of dollar-denominated oil imports in China, the world's biggest crude oil importer.
Stocks at Cushing fell almost 2.4 million barrels in the week to August 2, traders said, citing data from market intelligence firm Genscape.
Aiding the bullion's charm, the buck index.DXY touched a one-week reduced, making gold less costly for investors holding various other money. On Monday, China allowed the yuan to fall to its weakest level in a decade against the dollar and requested that its state-owned companies halt imports of USA agricultural products. On the MCX, gold contracts to be traded in August and October have both hit new highs, surging nearly 1.75% each.
In India, gold imports for July plunged 55% from a year ago to the lowest level in three years as local prices jumped to a record high.
Holdings of SPDR Gold TrustGLD, the globe's largest gold-backed exchange-traded fund, climbed 0.36% to 830.76 tonnes on Friday from Thursday.
Among other metals, silver rose 1.1% to $16.39 per ounce. The October platinum rose 4.90 dollars, or 0.57 percent, to settle at 857.90 dollars per ounce.