· Gold surged close to a seven-year peak on Monday, as investors flocked to the safe-haven metal on escalating U.S.-Iran tensions, while palladium surpassed the level of $2,000 to hit a record high.
Spot gold rose 1.7% to stand at $1,577.98 per ounce by 0409 GMT. Earlier in the session, it had rallied as much as 1.8% to touch $1,579.72, its highest since April 10, 2013.
U.S. gold futures gained 1.8% to $1,580.30.
· “The geopolitics is taking center-stage,” said Benjamin Lu, an analyst at Phillip Futures. “The Iran-U.S. tensions have escalated to a boiling point, that’s what has been pushing gold prices up.”
President Donald Trump threatened sanctions against Iraq on Sunday after Baghdad demanded that American and foreign troops leave, amid a growing backlash over the U.S. killing of a top Iranian military commander, heightening fears of wider conflict.
· Further spurring uncertainty, Iran said it would drop limits on enriching uranium, taking a further step back from commitments to a 2015 nuclear deal with six major powers.
The market’s risk-averse sentiment underpinned bullion, which is often seen as an alternative investment during times of political and financial uncertainty.
· Asian equities moved away from an 18-month peak and oil prices soared on the intense Middle East hostility.
· “If it (gold) breaks the key resistance level of $1,585, it would lead to the key psychological level of $1,600,” Lu said.
Investors also took stock of a private survey on Monday that showed slower expansion in December in China’s services sector, with business confidence falling to the second lowest on record, despite a pick-up in new orders.
· Gold risk reversals hit 3.5-month high on call demand
One-month risk reversal (XAU1MRR) on gold, a gauge of calls to puts, has jumped to 3.375 to hit the highest level since Sept. 24, indicating the investors are adding bets to position for a continued rally in the yellow metal.
The gauge has risen sharply from 0.75 to 3.375 in just ten days and indicates an increased demand for call options.
The surge validates or confirms the uptrend in prices. The yellow metal is currently trading at $1,580 per Oz, representing a 4% gain on a month-to-date basis. Prices rose 3.66% in December.
· Gold Price News and Forecast: Gold rallies 2% to fresh highs in risk-off start to the week
Gold probes 61.8% Fibonacci amid overbought RSI
Following its early-day run-up to the fresh high since April 2013, Gold prices seesaw around $1,575 amid Monday’s Asian session. The yellow metal is near to 61.8% Fibonacci retracement of its broad downpour from 2011 high to 2015 low, around $1,589.
However, overbought conditions of RSI are likely to challenge Aussie’s run-up, which if not respected can propel the quote to $1,600 mark. During the safe-haven’s further rise past-$1,600, March 2013 high near $1,616 will be in the spotlight.
· Spot palladium hit an all-time peak of $2,020.18 an ounce, and was last up 1.5% at $2,017.67.
“The (palladium) market continues to tighten and that’s what is pushing the market up,” said ING analyst Warren Patterson, adding, “The key risk moving forward is how sustainable this price move is.”
Plagued by sustained supply deficit, palladium, used mainly in catalytic converters in vehicles, rose about 54% in 2019.
Elsewhere, silver gained 2.2% to $18.45 an ounce, after touching a more than three month high at $18.50, while platinum advanced 1% to $990.05.
Reference: Reuters, FX Street
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