*Gold gains on Yemen attacks, China Lunar New Year buying*
· Gold prices rose to their highest in more than a week on Monday, after a missile attack in Yemen over the weekend fanned geopolitical concerns and boosted the metal’s safe-haven appeal, while buying ahead of the Chinese New Year also lent support.
· Spot gold was up 0.3% at $1,560.89 per ounce by 0726 GMT, after touching its highest since Jan. 10 at $1,562.51 earlier in the session. U.S. gold futures were flat at $1,560.50.
· “Chinese New Year is in front of us and some buying has emerged because of that,” Ajay Kedia, director at Kedia Advisory in Mumbai, said.
“The market is also going up because of central bank buying, geopolitical risks such as Yemen missile attack - all these factors are supporting gold.”
· Iran-aligned Houthis attacked a military training camp in the Yemeni city of Marib on Saturday, killing dozens of people.
Gold is considered a safe investment in times of political and economic uncertainty.
· “Investors are clearly focused on the longer term dynamics, which should play in gold’s favour with low interest environment, central banks’ loosening policy to help support growth and subsequent weakness in the dollar,” ANZ analyst Daniel Hynes said.
· The U.S. Federal Reserve will meet for its first policy meeting of the year later this month, where it is widely expected to keep interest rates unchanged.
The central bank cut interest rates three times last year before deciding in December to stand pat. Lower interest rates encourage the buying of non-interest-paying bullion.
However, limiting gold’s advance, Asian stocks held close to a 20-month high, supported by an extended rally in global stocks on Wall Street and solid U.S. economic data.
· U.S. homebuilding surged to a 13-year high last month as activity increased across the board, while production at factories increased for a second straight month, data showed on Friday.
· Trading volumes were low with U.S. markets closed for a holiday.
· What can take the gold market from $1,550 to $1,600 and higher? Goldex CEO and founder Sylvia Carrasco told Kitco News that she is not ruling out the $1,900 an ounce level this year if geopolitical and trade tensions escalate in the current economic climate.
There are a number of strong drivers supporting gold prices this year, including geopolitical and trade tensions, global debt, dovish central banks, weakening U.S. dollar as well as the political situation in the U.S., Carrasco said on Thursday.
"With the current economic climate, gold should be between $1,500 and $1,600. If on top of that bare minimum, you add very strong geopolitical tensions or commercial trade issues, then you take it from $1,600 up to $1,900," she added.
At the time of writing, the spot gold price was trading at $1,560.40, up 0.24% on the day and up 2.8% since the start of the year.
Gold is a hedge against inflation that is being used more and more by investors who are realizing the benefits of the yellow metal, Carrasco said.
"Gold is the hedge that people should be using. I wouldn't build my personal wealth portfolio just on gold. But gold is more and more clearly overtaking oil and any other hedging mechanisms … Gold will be a good trade whether for speculative reasons or for trading," she noted.
· Spot gold may test a resistance at $1,564 per ounce, according to Reuters technical analyst Wang Tao.
· Speculators cut their bullish positions in COMEX gold contracts in the week to Jan. 14, data showed.
· Holdings of the world’s largest gold-backed exchange-traded fund SPDR Gold Trust rose 2.20% to 898.82 tonnes on Friday, their highest since November 11.
· Palladium advanced 0.9% to $2,502.00 an ounce, after the auto-catalyst metal hit a record high of $2,537.06 on Friday.
· Silver rose 0.4% to $18.07, while platinum jumped 0.8% to $1,026.53.
Reference: CNBC, Kitco
Thai
Eng