Gold prices settle at highest level since November

Apr 13, 2017, 01:29
Gold prices settle at highest level since November

Global tensions escalated on Tuesday when Western countries were joined by Middle Eastern allies in a push to isolate Syrian President Bashar al-Assad following a chemical attack in the country last week.

Spot gold had edged up 0.1 per cent to US$1,274.91 per ounce by 0311 GMT, after earlier hitting its strongest since Nov 10 at US$1,279.80.

Gold on Tuesday closed above the 200-day moving average for the first time this year after struggling to do so over the past few weeks. Trump said in a tweet that North Korea was "looking for trouble" and the United States would "solve the problem" with or without China's help.

Investors continued to play it safe as concerns over USA military action against Syria and North Korea along with worries over the French presidential election spurred a move into assets perceived as less risky.

United States gold futures rose 0.2 per cent to US$1,277.20.

The dollar started the week near three-week highs against a basket of currencies after a key Federal Reserve official reinforced the US central bank's commitment to continue raising interest rates. Rising U.S. rates increase the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced.

The June gold contract was up $19.50 at US$1,273.40 an ounce and May copper contracts slipped two cents at US$2.58 a pound.

"The uncertainty of Trump's action or inaction has partly supported gold prices", he said, adding that last week's US airstrike on Syria was unexpected and there's still "controversy" surrounding a possible connection between Russian Federation and Trump and his administration. "From a technical perspective, the way is now clear for a run at $1,300 and possibly higher", said Jeffrey Halley, senior market analyst at OANDA. "A break of $1240 will prelude a deeper correction".

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund (ETF), rose 0.50 per cent to 842.41 tonnes on Tuesday.

Spot silver dipped 0.1 percent to $18.30 an ounce.

The spread between gold and platinum hit its highest since October 2016 at US$318.23.

"There is certainly more geo-political risks at the moment and that is more positive (for) gold than platinum and there is no surprise in that sense to see the spread widen.There is generally a downbeat (sentiment) about diesel cars in Europe", a London-based market analyst with a mining company said.

Platinum is used in catalysts in diesel-powered vehicles, which are going out of favour in Europe. Platinum fell 0.7 percent to $960.50 per ounce after rising over 3 percent in the previous session, while palladium dropped 0.9 percent to $794.03.