SINGAPORE – Gold smashed above $1 350/oz to a 14-month high as rising geopolitical tensions bolster haven demand ahead of next week’s Federal Reserve meeting, when policy makers may move closer to cutting rates.
Bullion for immediate delivery rose as much as 1.2% to $1 358.26/oz. Prices are set for a fourth weekly gain, the longest run since January. Investors are also pouring into gold-backed exchange-traded funds, with holdings rising to the highest since late February.
Gold has surged in June, shaking off a lackluster few months, as investors brace for more uncertainty around global trade and on expectations the Federal Reserve is set to lay the groundwork for looser monetary policy at its meeting next week.
Haven assets are getting a boost from jitters in the Middle East after the Trump administration blamed Iran for attacks on two oil tankers, and the warning by US economic adviser Larry Kudlow that Beijing may face consequences it if refuses an invitation to restart trade talks.
“The news this week has been overridingly gold friendly,” said Ole Hansen, head of commodity strategy at Saxo Bank. “We have cleared the first of a few major hurdles on route to a potential $100 extension.”
Bullion may reach $1 400 this year as investors hedge risk, according to Rhona O’Connell, head of market analysis for EMEA and Asia regions at INTL FCStone. Billionaire trader Paul Tudor Jones said earlier this week gold is his favorite pick in the next 24 months and, if prices hit $1 400, they will quickly move to $1 700.
Other precious metals also rose. Silver has gained 0.1% this week, platinum is up 1.4% and palladium has rallied 7.3% to the highest since April 29.