Global gold prices gain amid concerns over trade war, Italy elections
Gold prices rise as investors opt for the safe-haven asset amid fears of a global trade war and uncertainty surrounding the outcome of elections in Italy
Gold prices rose on Monday as investors opted for the safe-haven asset amid fears of a global trade war and uncertainty surrounding the outcome of elections in Italy, which could spell new concerns for the euro zone.
Spot gold rate rose 0.4% to $1,326.76 per ounce at 1.26pm. Earlier in the session, it hit $1,327.86, the highest since 27 February. US gold futures for April delivery rose 0.4% to $1,328.20 per ounce.
The dollar fell for a fourth straight session to trade around 105.37 yen, but was slightly above Friday’s low of 105.23, a level not seen since November 2016. The US currency slipped from its six-week high that it touched on 1 March, after US President Donald Trump announced plans to levy hefty tariffs on aluminium and steel imports igniting fears of retaliation from its trade partners.
“Any escalation of trade wars will significantly dent the US dollar appeal, weigh negatively on US assets such as bond and equities and make gold the go-to hedge against rising US fiscal and political vulnerabilities,” Stephen Innes, APAC trading head at OANDA, said in a note.
A weaker dollar supports gold, making it cheaper for holders of other currencies.
Asian investors dumped shares and drove to the safety of the yen and gold amid fears of a global trade war and worries of political uncertainty in Italy, risks that cloud the outlook for world growth.
“I think gold prices are up partly because of the uncertainty over the impact of the Italian election on the euro zone,” said Ji Ming, chief analyst, Shandong Gold Group.
Italian voters delivered a hung parliament on Sunday and if early projections are confirmed, none of Italy’s three main groups will be able to rule alone and there is little prospect of a return to mainstream, moderate government, giving the European Union a new headache to deal with.
Investor appetite for a safe-haven asset such as gold rises during times of geopolitical and financial uncertainty.
Spot gold could rise to $1,332 per ounce, as it has pierced above a resistance at $1,325, according to Reuters technical analyst Wang Tao.
In other precious metals, silver rose 0.4% to $16.55 per ounce. Platinum inched up 0.1% to $963.24 per ounce, while palladium gained 0.4% to $966.40. Reuters
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