Gold hits two-week high as dollar tumbles after G20 trade message

NEW YORK/LONDON — Gold prices edged higher to a twoweek peak on Monday as the dollar weakened to a six-week low after a G20 weekend summit dominated by the US administration’s protectionist stance.

The metal has been rising since Wednesday, when the dollar weakened after the Federal Reserve raised US interest rates but stopped short of predicting a sharper acceleration in monetary tightening in the next two years.

The dollar fell to a six-week low before recovering to trade 0.10% higher against a basket of currencies.

Gold is sensitive to falling interest rates, which reduces the opportunity cost of holding nonyielding bullion.

“I think gold prices are going to continue to rally and the target to the upside is $ 1,250,” said Phillip Streible, senior commodities broker for RJO Futures in Chicago.

“I don’t anticipate that the Fed will be so aggressive on raising rates… and there’s a lot of uncertainty with Brexit becoming off icial later on in the month and there’s a lot of questions circulating around Russia.”

Markets had been volatile as Federal Bureau of Investigation Director James Comey on Monday confirmed that the agency was investigating possible Russian government efforts to interfere in the 2016 US election including any links between President Donald J. Trump’s campaign and Moscow.

Spot gold rose 0.44% to $ 1,233.92 an ounce by 2: 14 EDT ( 1814 GMT), after touching $ 1,235.50, its highest since March 6. US gold futures gained 0.30% to settle at $ 1,234.

Breaking a decade- long tradition of endorsing open trade, G20 finance ministers and central bankers made only a token reference to trade at the weekend, acquiescing to an increasingly protectionist United States.

Global markets balked at the move which soured risk appetite, pressuring stocks, the dollar and oil and driving investors into safe haven gold.

The precious metal has rebounded more than $ 35 from the low hit before the Fed policy announcement last Wednesday, while the dollar has fallen 1.70%.

“The dovish outlook… following last Wednesday’s Fed meeting is clearly still having an impact. This is likely to lure a number of speculative financial investors back into gold after this group massively reduced their net long positions in the run-up to the meeting,” Commerzbank said.

Money managers reduced their net long, or buy, positions in gold by 44,058 lots to 49,835 lots during the week to March 14, the lowest since early January.

Spot gold is expected to test resistance at $ 1,237, a break above which could lead to gains to $1,243, Reuters technical analyst Wang Tao said.

Denting the bullish gold narrative, holdings of SPDR Gold, the world’s largest gold- backed exchange-traded fund, fell 0.35% to 834.10 tons on Friday.

Among other precious metals, spot silver rose 0.30% to $17.37 an ounce, platinum was up 1.20% at $969.70 and palladium firmed by 1.10% to $781.20. —