Gold hovers near one-month peak as investors search for safety

Gold Refinery gold shavings. Picture: AFP PHOTO/OZAN KOSE
Gold Refinery gold shavings. Picture: AFP PHOTO/OZAN KOSE

Gold prices held steady near one-month highs on Tuesday as an escalation in Sino-US trade war sent investors looking for safe-haven assets.

Spot gold was mostly steady at $1,298.48 as of 0255 GMT, after hitting $1,303.26, its highest since April 11.

US gold futures were down 0.2% at $1,299.20.

Asian shares extended losses on Tuesday, following sharp falls on the Wall Street overnight, the yen strengthened and US Treasury yields ticked lower after Beijing on Monday announced retaliatory tariff-hike to counter Washington.

“Gold is moving because people are looking to find a safe harbour in the storm while they wait for the dust to settle,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“Prices could further rise to $1,310-$1,312 if stock markets end lower. But, any sudden breakthroughs in the trade stand-off possibly could see investors stampeding for the exit as fast as they arrived.”

On Monday, the metal rose 1.1% to mark its biggest one-day percentage rise since February 19. Prices broke through multiple technical resistances, which had acted as a barrier for bullion despite the slump in global markets over the past week.

The biggest trigger for gold came on Monday after China announced that it would impose higher tariffs on a range of US goods, which followed Washington’s decision last week to hike its own levies on $200bn in Chinese imports.

In addition to more tariffs, traders are concerned that China, the largest foreign US creditor, may dump treasuries to counter the Trump administration’s hardening trade stance.

Adding to financial market worries, gold investors were also keeping a tab on escalating tensions between the US and Iran after Saudi Arabia said on Monday that two of its oil tankers were among those attacked off the coast of the United Arab Emirates.

“The Middle East escalation news brings us a step closer to a significant US military reprisal. Fears that China will weaponise US Treasuries in trade war retaliation is scaring the daylights out of markets even if it is unlikely,” said Stephen Innes, head of trading and market strategy at SPI Asset Management.

Rise in investor interest in bullion was also evident after holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.44% on Monday, its biggest one-day rise in nearly two months.

Among other precious metals, silver edged 0.1% higher to $14.78 per ounce, while platinum rose 0.3% to $855.85. Palladium rose 0.6% to $1,331.