Gold rallies to near six-year top on US-Iran dispute

[BENGALURU] Gold prices rose more than 1 per cent on Monday to a near six-year peak as the dollar fell, with safe-haven bullion also boosted by US President Donald Trump's announcement to impose fresh sanctions on Iran.

Spot gold was 1.2 per cent higher at US$1,415.16 an ounce by 1.57pm EDT (1757 GMT), heading for a fifth straight session of gains. Its session high of US$1,416.84 was its highest level since late August 2013. US gold futures settled up 1.3 per cent at US$1,418.20 an ounce.

"Gold is holding some sprawling gains from the earlier sessions prompted by slumping dollar and increasing safe haven demand on the back of President Trump threatening to impose new sanctions on Iran," said Alex Turro, market strategist at RJO Futures. "Gold is also getting some underlying support by the central banks trying to cut rates."

Mr Trump imposed new US sanctions on Iran on Monday following Tehran's downing of an unmanned American drone and said the measures would target Iranian Supreme Leader Ayatollah Ali Khamenei.

Gold prices have risen over 8 per cent this month, and about US$75 an ounce over the past week.

"It's the strong upside momentum from last week along with higher ETF buying and a weaker dollar boosting gold prices," INTL FCStone analyst Edward Meir said.

Holdings of the world's largest gold-backed ETF, SPDR Gold Trust , jumped 4.6 per cent on Friday from the previous day, its biggest daily percentage gain since September 2008.

Helping gold's appeal, the dollar dipped, after its biggest weekly drop since mid-February last week on bets the US Federal Reserve would start lowering interest rates as early as next month.

The Fed and the European Central Bank last week hinted they were open to easing policy to counter a global economic slowdown, exacerbated by trade tensions.

Investors' eyes will be on a summit in Japan this week of leaders from the Group of 20 leading world economies. China's President Xi Jinping and Mr Trump are expected to meet on the sidelines, which could be pivotal in getting negotiations back on track to resolve a trade war.

"The China-US trade conflict is not getting anywhere. Additionally, the Iranian conflict is also starting to heat-up... That is why people are seeking gold as safe haven," said an analyst based in New York. "The climb in gold prices has woken people up. Now that gold has broken the 1,400 level, it is expected to go up."

Speculators also boosted their bullish stance in COMEX gold in the week to June 18, the US Commodity Futures Trading Commission said on Friday. Silver edged 0.4 per cent higher to US$15.41 per ounce and platinum rose 0.7 per cent to US$811.36. Palladium climbed 2.6 per cent to US$1,539.51 an ounce.

REUTERS