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Gold glistens as US-Iran tensions fuel flight to safety
NEW YORK, June 22, 2019 (BSS/AFP) – Gold prices struck near six-year highs
on Friday as a weaker dollar and escalating US-Iran tensions fueled a flight
to safer investments, while oil futures built on strong gains.
The week has been an eventful one for stock markets, crude prices and the
dollar — and investors still have a key G20 summit to look forward to amid
hopes for progress on the US-China trade war.
“Gold has been one of the week’s biggest stories, with the precious metal
hitting $1,400 (an ounce) for the first time in almost six years overnight,”
said Joshua Mahony, senior market analyst at IG trading group.
The gold spike has been caused by the change in sentiment and dollar
weakness amid “overnight talk of a canceled US strike on Iranian targets
highlighting how close we are from a huge ramp-up in conflict between the two
nations,” he said.
US President Donald Trump said he approved the attack then at the last
minute scrapped strikes against Iranian targets.
Oil prices rose further Friday but the gains were muted compared to a day
earlier when crude futures surged about 4.5 percent on rising tensions
between the US and the Islamic republic.
Fears of a conflict in the oil-rich Middle East ratcheted up Thursday when
Tehran shot down a US spy drone that it said was violating its airspace but
which Washington said was over international waters.
Recent attacks on tankers close to the Strait, a key shipping lane in the
Gulf region through which nearly one-third of the world’s oil is transported,
sent oil prices surging late last week.
– ‘Gold’s perfect storm’ –
But it was gold’s turn to take center stage on Friday, with the commodity
reaching $1,411.63 an ounce, the highest level since September 2013.
“A slowing global economy, imminent US rate cuts and rising geopolitical
tensions provide a near perfect storm for gold bugs,” said XTB chief market
analyst David Cheetham.
Demand for gold has surged since the Federal Reserve on Wednesday
indicated it would likely cut interest rates soon — for the first time in a
decade — which sent the dollar tumbling across the board.
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Stock markets also cheered the Fed’s pivot, which opened the door to a
potential rate cut as soon as July, although Wall Street retreated from
Thursday’s gains, which took the S&P 500 to a new record.
But the dollar’s losses have been capped by both the ECB and Bank of
England also presenting dovish outlooks for eurozone and British interest
rates amid growth weakness, in part owing to Brexit uncertainty.
“With central banks having set out their stalls, it’s now over to the
presidents of the US and China next week to really blow investors away and
push forward with trade talks,” said Craig Erlam, senior market analyst at
Oanda.
Markets are squarely focused on next week’s planned meeting between Trump
and his Chinese counterpart Xi Jinping on the sidelines of the Group of 20
summit in Japan.
– Key figures around 2100 GMT –
Gold: UP at to $1,388.44 an ounce from $1,388.45
Brent North Sea oil: UP 89 cents to $65.34 per barrel
West Texas Intermediate: UP 53 cents to $57.60 per barrel
New York – Dow: DOWN 0.1 percent to 26,719.13 (close)
New York – S&P 500: DOWN 0.1 percent to 2,950.46 (close)
New York – Nasdaq: DOWN 0.2 percent to 8,031.71 (close)
London – FTSE 100: DOWN 0.2 percent at 7,407.50 points (close)
Frankfurt – DAX 30: DOWN 0.1 percent at 12,339.92 (close)
Paris – CAC 40: DOWN 0.1 percent at 5,528.33 (close)
EURO STOXX 50: DOWN 0.3 percent at 3,459.04
Tokyo – Nikkei 225: DOWN 1.0 percent at 21,258.64 (close)
Hong Kong – Hang Seng: DOWN 0.3 percent at 28,473.71 (close)
Shanghai – Composite: UP 0.5 percent at 3,001.98 (close)
Euro/dollar: UP at $1.1322 from $1.1289 at 2130 GMT
Pound/dollar: DOWN at $1.2696 from $1.2702
Dollar/yen: UP at 107.60 yen from 107.27 yen
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