Gold blasts higher as investors seek shelter from geopolitical tensions

June 14, 2019

London (June 14)  Gold prices shot higher on Friday, setting up for a four-session win streak, as investors sought out the haven metal amid rising tensions in the Middle East and Hong Kong.

Rising expectations for a summer interest rate cut from the Federal Reserve, with important retail sales data due later, was also supporting the metal.

Gold for August delivery GCQ19, +1.09%  climbed $15.90, or 1.2%, to $1,359.50 an ounce, after a gain of 0.5% on Thursday. July silver SIN19, +1.06% which serves as both a haven asset and has industrial purpose, gained 14 cents, or 1%, to $15.035 an ounce. July copper HGN19, -0.64%  fell 0.3% to $2.648 a pound.

The U.S. military claims to have a video that shows an Iranian navy boat removing an unexploded mine from near one of two tankers attacked in the Gulf of Oman on Thursday. The U.S. has blamed Iran for those attacks, a charge that country’s government denies. Oil prices surged on news of the attacks, through prices eased back Friday.

A fresh flare up in tensions between the U.S. and Iran piled on the geopolitical worries for investors, who are already dealing with growing acrimony over trade between the U.S. and China. And the weekend could bring more unrest in Hong Kong, where protesters are planning more demonstrations against legislation that would allow suspects to be tried in mainland Chinese courts.

Gold has now blasted through an important technical resistance level at $1,350 an ounce, said Stephen Innes, managing partner at Vanguard Markets, in a note to clients.

“Today’s price action suggests the market is not long enough gold, especially by historical standards, for this elevated level risk as investors have remained far too complacent to mounting risk in Hong Kong and the smolder explosive political powder keg in the Middle East,” Innes said.

Gold has also benefited from a sharp slide in U.S. Treasury yields TMUBMUSD10Y, -1.45% as investors increasingly bet the Fed will move later this year to cut interest rates, a prediction they believe was supported by a soft inflation reading in Wednesday data. Investors will get an important update on U.S. retail sales on Friday, and signs of stronger sales could take some bets on a near-term Federal Reserve rate cut off the table.


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