Global gold prices run toward $1,300 as risk flares from UK to middle east2 min read . Updated: 07 Jun 2017, 09:53 AM IST
Gold prices for immediate delivery were at $1,292.60 an ounce at 7.52 am , holding near Tuesday's intraday peak of $1,296.15
Singapore: Gold prices are making a run toward $1,300 an ounce. The metal has rallied to the highest since November as investors position themselves for the outcome of the UK election and potential drama of former FBI director James Comey’s testimony, while also tracking tensions in the Middle East.
Bullion for immediate delivery was at $1,292.60 an ounce at 7.52am, holding near Tuesday’s intraday peak of $1,296.15, the highest level since 9 November, according to Bloomberg generic pricing. The gains have also been supported by a fall in the dollar, which has sunk to the lowest since October.
Gold prices have surged 13% in 2017, eking out gains every month, and a Bloomberg survey this week signalled further gains. The latest leg up has been supported by an increase in haven demand as UK voters head to the polls on Thursday, with the outcome set to dictate how the country handles Brexit.
On the same day, Comey is set to appear before a Congressional panel to testify about his investigation into President Donald Trump campaign’s ties to Russia.
“Rising political uncertainty continues to provide support for gold," Australia & New Zealand Banking Group Ltd said in a note, citing Comey and the UK polls. “This comes as the diplomatic crisis in the Middle East involving Saudi Arabia and Qatar intensifies. This has seen a continued rise in safe-haven buying of the precious metal. A weaker dollar is also playing its part."
Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed ties with Qatar on Monday citing its support for rival Iran and for extremist groups. The crisis pits US allies against each other, disrupting trade, flights and business activity in one of the world’s most strategically important regions.
Gold may end the year at $1,350 an ounce, according to the median estimate of 15 people surveyed at a conference organized by the Singapore Bullion Market Association this week. Twelve respondents were bullish, citing the global geopolitical uncertainty that continues to weigh on market sentiment.
While gold has rallied, investors remain mindful that the Federal Reserve is expected to raise rates again next week, adding to increases in December and March. Still, beyond that hike, the Fed isn’t going to be overly aggressive, according to TD Securities. A gauge of the dollar has lost 6.1% this year.
“The amount of uncertainty in the world has increased," said Avtar Sandu, Asian commodities manager at Phillip Futures Pte. “Despite the rate hike expected in June, the markets are pretty strong. Going forward, it’s a matter of how many hikes there are going to be and when. We just expect one more, maybe in December."
Shares of miners are reflecting the gain in prices since the start of 2017. Newcrest Mining Ltd., Australia’s largest producer, rallied as much as 2.2% to A$22.10 in Sydney trading on Wednesday, and is 7.8% higher this year. In Hong Kong, Zijin Mining Group Co. climbed 2.3%. Bloomberg