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Gold touches over 6-year peak as risk-off appetite stoked

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Gold prices jumped to a fresh six-year high on Monday as the announcement of new tariffs in the escalating Sino-US trade war sent equity markets tumbling, and investors rushing for safe-have assets.

[BENGALURU] Gold prices jumped to a fresh six-year high on Monday as the announcement of new tariffs in the escalating Sino-US trade war sent equity markets tumbling, and investors rushing for safe-have assets.

Spot gold jumped 1.2 per cent to US$1,544 per ounce as of 0141 GMT, having earlier touched US$1,554.56 an ounce, its highest since April 2013.

US gold futures were up 1.1 per cent at US$1,554.90 an ounce.

On Friday, US President Donald Trump announced a 5 per cent additional duty on US$550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on US$75 billion worth of US products.

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This caused US stocks to dive on Friday: with the Nasdaq Composite down 3 per cent, and the S&P 500 down 2.6 per cent.

On Monday, Japan's Nikkei and MSCI's broadest index of Asia-Pacific shares outside Japan fell sharply.

The markets are fully priced for a quarter-point cut in rates next month, and over 100 basis points of easing by the end of next year.

Yields on 10-year Treasury notes dived from a top of 1.66 per cent on Friday, leaving them almost matching two-year yields.

The US dollar index, which measures the greenback's value against a basket of six major currencies, slid 0.5 per cent on Friday, and was hovering close to that level.

Traders are looking at the Group of Seven summit, where Mr Trump said he wished he had raised tariffs on Chinese goods even higher last week.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.58 per cent to 859.83 tonnes on Friday.

Hedge funds and money managers increased their bullish stance in Comex gold and upped net long positions in silver contracts in the week to Aug 20, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Last week, most Asian hubs experienced a slight uptick in physical gold demand as consumers took advantage of a retreat in prices.

 

REUTERS