On Monday, rally in gold prices continued for a second week as tensions between the US and Iran support the secure demand for housing, adding momentum created by hopes for interest rate cuts from the Federal Reserve.
Meanwhile gold rose to $ 1,411.21, and this was the highest figure since September 2013.
The gold income for August delivery at the New York Mercantile Exchange Comex division earned $ 12.15 or 0.9% to $ 1,412.25, marking the highest since July 2014.
Mike Pompeo, the Secretary of State, warned that the US would announce “important” sanctions and said it would seek to build a “global coalition” to deal with Iran while meeting for talks with Saudi Arabia and the United Arab Emirates.
Indeed, sanctions will be the US response to the crackdown on Iran by an unmanned US drone last week. Donald Trump had approved aerial retaliation airstrikes before calling it later.
Geopolitical tension has provided a second engine at a gold rally powered by the expectations of monetary policy easing. Last week, the FED showed at its meeting last week that it could lower interest rates, possibly next month, to compensate for the effects of trade conflict with China, which has slowed global growth and underpinned US inflation.
Saxo Bank’s asset manager, Ole Hansen, noted that last week’s Merchant engagement report revealed a record high rise in long-term gold positions over the 3-week period ahead of Fed’s policy decision.
Hansen said, “With this in mind, the short term focus is turned into the ability of gold to keep these profits and to secure the new extension that has not bought another high but a small new potential.”
Stephen Innes, the OANDA leader in Singapore, showed that “gold continues to trade well despite the stock it collects at all levels of time and while I think one of these markets will prove to be wrong, at present, the race for the end of the fixed income market remains supportive for both. ”
Innes warned that negative dangers to gold focused on any sign of escalation in the Middle East or “a more friendly atmosphere to trade” from the G20 meeting this week, but stressed that strategic buyers were moving on the rise and said the official demand from China also remained a strong support pillar.
The data released earlier this month showed that the Chinese central bank had saved its monthly gold purchases to nearly 16 tonnes only in April, but far above the average of the previous four months.
Innes added that given the number of potential catalysts that could cause a gold stock change, it should be their first investment in the flipside.
Silver revenue in the trade of other metals rose 0.3% to $ 15,338 a troy ounce from 8:20 AM ET.
In base metals, copper fell 0.4% to $ 2,692 a pound./Investing.com