Gold shines on Iraq chaos

GOLD hit its highest price in nearly three weeks yesterday, as turmoil in Iraq supported the metal's safe-haven appeal‚ while platinum group metals gained ahead of the outcome of wage talks to end a five-month-long strike on South African mines.

Spot gold peaked out 0.5% to $1282.50 an ounce yesterday evening, after hitting $1283.70 earlier in the session – the highest since late May.

Sunni insurgents seized a mainly ethnic Turkmen city in northwestern Iraq on Sunday after heavy fighting‚ solidifying their grip on the north after a lightning offensive that threatens to dismember Iraq.

Gold is seen as a safe-haven asset at times of geopolitical uncertainty. "Gold is expected to climb this week as the situation in Iraq remains volatile‚" Howie Lee‚ an analyst with Phillip Futures, said.

"At its current level‚ gold appears to have plenty of upside before facing heavy resistance‚" Lee said‚ adding that immediate resistance was expected at $1292.

Data from the Commodity Futures Trading Commission on Friday showed that investor sentiment towards gold was turning positive. Hedge funds and money managers increased their bullish bets in gold futures and options in the week to June 10‚ their first increase in five weeks.

Other traders warned that this week's Federal Reserve policy meeting could bring caution to any rally in gold. The Fed will conclude a policy meeting tomorrow, with markets watching out for any signals on when the US central bank might begin hiking interest rates.

Among other precious metals‚ platinum and palladium gained yesterday after logging sharp declines last week on easing supply worries.

The leader of the Amcu union said on Friday a wage deal with the top three platinum producers was imminent‚ signalling a possible end to a crippling five-month strike that has disrupted global output of the metal. – Reuters