Spot gold was up 1% at $1,503.60 per ounce, as of 0601 GMT. Prices had dipped 1.2% in the previous week on hopes that an end to the U.S.-China trade tiff could be near.
U.S. gold futures rose 0.8% to $1,511.40 per ounce.
· The attacks on Saudi oil installations have lead to a rotation of interests out of stocks and into safe-havens, said OANDA analyst Jeffrey Halley.
· The risk-averse sentiment in the market underpinned the bullion, often seen as an alternative investment during times of political and financial uncertainty.
· With escalating tensions in the Middle East and hopes of more stimulus measures from major central banks, the next target for gold will be $1,530, Halley added.
Yemen’s Iran-backed Houthi rebel group claimed responsibility for the attack over the weekend on the world’s biggest oil-processing facility.
· However, a senior U.S. official said that evidence indicated Tehran was behind it, and President Donald Trump said the United States was “locked and loaded” for a potential response to the attack, souring its already strained relations with Iran.
The event hurt risk sentiment in the markets, with Asian equities trading lower at 515.4, and the safe-haven yen up 0.4% to 107.64 per dollar. Against a basket of currencies, the dollar was 0.2% lower at 98.053.
· Investors also await the outcome of the U.S. Federal Reserve and Bank of Japan’s policy meetings on Wednesday, for signals on their future policy path.
· “Accommodative monetary policy by global central banks will support bullion’s appeal for 2H 2019,” Phillip Futures analyst Benjamin Lu said in a note. Central banks globally are facing increasing pressure to dole out monetary support for flagging economies as the U.S.-China trade dispute hurt trade and business sentiment. Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.
· Denting risk sentiment was dismal data from China, which showed factory and consumer sectors slowed further in August, with industrial production growing at the weakest pace in 17-1/2 years, a sign of increasing weakness in an economy lashed by trade headwinds and soft domestic demand.
· Spot gold could retest resistance at $1,524 per ounce, as it has temporarily bottomed around a support at $1,480, said Reuters technical analyst Wang Tao.
· Gold prices shot higher by over 1% in risk-off start to the week
Gold prices have shot higher in the open this week due to the increased tensions in the Middle East following the attack on Saudi Arabia’s oil and gas facilities in Abqaiq which has suspended half of the kingdom’s processing, corresponding to 6% of world supply. Gold jumped 1.2% in the open, travelling to a high of $1,506 from $1,488.75 the low following a weekly decline of 1.1%. last week.
Fed in focus
This week will be critical for Gold with the Federal Reserve in mind, priced in by the market to cut a further 25 basis points. " It will be justified as insurance to mitigate the trade and global headwinds facing the economy. Rising inflation and a strong consumer mean anyone expecting a more dovish message will be left disappointed," analysts at ING Bank argued.
Gold levels
Gold has been offered below the 21-day moving average around a 38.2% Fibonacci retracement around the 1490 mark. However, bulls are back in lay while on the 1,500 handle but will need to get back above 1,550 which then guards prospects for 1,590 as the 127.2% Fibo target area.
· Among other precious metals, silver jumped as much as 3% to $18 an ounce and platinum was up 0.5% at $953.31. Meanwhile, palladium rose 0.5% to $1,614.00 per ounce.
Reference: Reuters, FX Street
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