· Gold prices rose to their highest in more than two months on Monday in thin year-end trading as the dollar dipped and U.S. military strikes in the Middle East drove investors towards the safe-haven metal.
Spot gold rose 0.3% to $1,514.94 per ounce by 0359 GMT. Earlier in the session, prices hit their highest since Oct. 25 at $1,515.80. U.S. gold futures were unchanged at $1,518.
· “We are looking at pre-positioning for next year and a rebalancing of portfolios ahead of year end, overlaid with very low liquidity levels, that are essentially exacerbating the volatility and making these moves appear exaggerated,” said Ilya Spivak, a senior currency strategist at DailyFx.
Gold is receiving modest support from the U.S. airstrikes in the middle east, Spivak added.
· The U.S. military on Sunday carried out successful air strikes in Iraq and Syria against an Iran-backed militia group, spurring market uncertainty and geopolitical tensions.
· Gold is a considered a safe investment in times of geopolitical and economic uncertainty.
Further helping gold, the dollar slipped against a basket of rivals, making gold cheaper for holders of other currencies.
· Gold prices have risen about 18% this year and were on track for its best year since 2010, mainly due to the 17-month-long China-U.S. tariff war and its impact on global economic growth.
“But from a pure macro and risk perspective, it currently makes little sense for gold to be trading above $1,500/oz. The surging equity market and higher gold prices seldom, if ever, exist in the same time frame and simultaneously moving higher,” said Stephen Innes, a market strategist at AxiTrader in a note.
· On the trade front, China’s Commerce Ministry on Sunday said it has “proactively dealt with” trade frictions with U.S. this year.
· Market participants, however, remained wary even after Washington and Beijing have made progress in their tariff dispute and an official ratification of an initial trade deal was close.
· Indicative of investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.1% to 893.25 tonnes on Friday, the highest since Nov. 29.
Among other precious metals, silver rose 0.9% to $17.92 per ounce, while platinum climbed 0.2% to $946.62. Palladium was flat at $1,905.28 per ounce.
Reference: CNBC
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