Gold gains as greenback reels from concerns over trade war, Italy elections

GOLD prices rose on Monday as the dollar remained subdued on fears of a global trade war, with uncertainty surrounding the outcome of elections in Italy, which could spell new concerns for the euro zone, lending further support to the yellow metal.

Spot gold was up 0.30% at $ 1,326.41 per ounce at 0414 GMT. Earlier in the session, it hit $ 1,327.03, the highest since Feb. 27.

US gold futures climbed 0.30% to $1,327.70 per ounce.

The dollar index, which measures the greenback against a basket of major currencies, was mostly unchanged at 89.971, after falling against most currencies on Friday.

The US currency slipped from its six- week high that it touched on March 1, after US President Donald Trump announced plans to levy hefty tariffs on aluminum and steel imports igniting fears of retaliation from its trade partners triggering a trade war.

“Any escalation of trade wars will significantly dent the US dollar appeal, weigh negatively on US assets such as bond and equities and make gold the go-to hedge against rising US fiscal and political vulnerabilities,” Stephen Innes, APAC trading head at OANDA, said in a note.

A weaker dollar supports gold, making it cheaper for holders of other currencies.

Asian shares were on the backfoot and the safe-haven yen rose on Monday amid fears of a global trade war, while the euro pared gains as investors worried Italy’s national elections could deliver an anti- establishment government.

“I think gold prices are up partly because of the uncertainty over the impact of the Italian election on the euro zone,” said Ji Ming, chief analyst, Shandong Gold Group.

Italian voters delivered a hung parliament on Sunday and if early projections are confirmed, none of Italy’s three main groups will be able to rule alone and there is little prospect of a return to mainstream, moderate government, giving the European Union a new headache to deal with.

Investor appetite for a safehaven asset such as gold rises during times of geopolitical and financial uncertainty. Spot gold could rise to $1,332 per ounce, as it has pierced above a resistance at $ 1,325, according to Reuters technical analyst Wang Tao.

Silver rose 0.60% to $16.58 per ounce. Platinum inched 0.60% higher to $ 965.49 per ounce, while palladium gained 0.30% to $994.50. —