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Gold jumps to 6-year peak on weaker US$

Bengaluru

GOLD prices climbed more than one per cent on Tuesday to a six-year high, as the US dollar slipped to multi-month lows on prospects of monetary easing by the Federal Reserve, while simmering US-Iran tensions lifted appeal for the safe-haven metal. Spot gold was up 0.9 per cent at US$1,431.93 per ounce, as at 0739 GMT, after hitting its highest since May 14, 2013, at US$1,438.63.

It was headed for a sixth consecutive session of gains and has risen nearly 10 per cent so far this month.

US gold futures jumped 1.3 per cent to US$1,436.20 an ounce.

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Bets for lower interest rates, weaker US dollar and tensions in the Middle East are providing an ideal environment for gains in gold prices, said Michael McCarthy, chief market strategist, CMC Markets.

US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions on Monday to increase pressure on Iran after Tehran's downing of an unmanned American drone.

"The outlook for gold is very positive in the coming months, however, we would be concerned that this rally may have over extended itself," Mark O'Byrne, research director at Dublin-based gold dealer GoldCore, said in a note. "It (gold) may be vulnerable to a correction in the short term, specifically in the next few days prior to month-end."

Meanwhile, the dollar index dipped to a three-month low on Tuesday, making bullion cheaper for investors holding other currencies.

Investors looked to whether Mr Trump and Chinese President Xi Jinping would at least call a truce in their trade war when they are expected to meet at the G20 summit in Osaka later this week.

"The main event this week will be the sidebar meeting between Trump and Xi, which could stop the current gold rally with a productive sit-down that ends up in a trade agreement," Alfonso Esparza, a senior market analyst at OANDA, said in a note.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.37 per cent on Monday, after posting their biggest percentage gain in nearly 11 years on Friday.

On the technical front, spot gold may test a resistance at US$1,439 per ounce, a break above could lead to US$1,461, according Reuters technical analyst Wang Tao.

Among other precious metals, silver was up 0.1 per cent at US$15.44 per ounce and platinum gained 0.3 per cent to US$812.53. Palladium was steady at US$1,534.40 an ounce after hitting its highest since March 27 at US$1,545.87 earlier in the session. REUTERS