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Gold inches up as investors seek safe havens from risk

Commodities
Johannesburg - Gold rose on Tuesday as investors sought assets seen as havens from risk amid mounting political and security concerns over North Korea, the Middle East and the looming French election.

Spot gold inched up 0.2 percent to $1257.01 (R17372.19) per ounce, while US gold futures rose 0.4 percent to $1259.20.

Heightened tensions in the Korean peninsula and Middle East following US missile strikes on Syria, along with uncertainty about the result of the upcoming French presidential election have made investors nervous.

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Bullion gained 0.2 percent while US gold futures rose by 0.4 percent with a lot of supporting factors at play. Photo: Reuters

“There a lot of supporting factors for gold at play here,” said Carsten Fritsch, said commodity analyst at Commerzbank, referring to safe-haven buys on risk-aversion.

Investors also bought the Japanese yen and US Treasuries, while the dollar index softened and stocks took a knock.

The Federal Reserve plans to raise US interest rates gradually so as to sustain healthy growth without letting the economy overheat, Fed chair Janet Yellen said on Monday.

Rising interest rates lift the opportunity cost of holding non-yielding bullion.

From a technical viewpoint, a rally above $1260 could be hard to sustain “as gold lacks momentum”, Jeffrey Halley, a senior market analyst at OANDA said. “A break of $1240 will prelude a deeper correction.”

Commerzbank’s Fritsch said a drop below $1250 prompted buying interest, establishing it as solid support. Gold has been failing to break key chart resistance at its 200-day moving average.

“Geopolitical developments are likely to continue to provide an underlying level of support over the short term, however, the continued failed breaks above the 200-day moving average donot instil confidence in the metal’s ability to break higher out of the recent range,” MKS PAMP Group trader Sam Laughlin said.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.21 percent to 838.26 tons on Monday from 836.49 tons on Friday.

Spot silver was flat at $17.91 an ounce after marking its lowest in more than two weeks at $17.71 in the previous session.

Platinum rose 0.5 percent to $940.25 an ounce.

It hit its weakest in more than three weeks at $931.85 on Monday. The spread between gold and platinum hit its highest since

October, 2016 at $318.23.

“There is certainly more geopolitical risks at the moment and that is more positive (for) gold than platinum and there is no surprise in that sense to see the spread widen

"There is generally a downbeat (sentiment) about diesel cars in Europe,” a London-based market analyst with a mining company said.

Platinum is used in catalysts in diesel-powered vehicles, which are becoming out of favour in Europe.

Palladium slipped 0.2 percent to $799.45 after touching its weakest in more than a week at $784.72 in the previous session.

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