Gold at highest since May 1 on political uncertainty, dollar

Gold hit its highest in nearly four weeks on Friday in response to a weaker dollar and political uncertainty that led investors to shun riskier assets in favor of bullion.
“We have had the political noise coming from Trump and the US administration and there is a certain element of uncertainty in the markets in general, which is supporting gold. Equities are also down,” Carsten Menke, an analyst at Julius Baer in Zurich said.
Leaders of the world’s rich nations face difficult talks with Donald Trump at a G-7 summit in Sicily on Friday after the US president lambasted NATO allies and condemned German trade policies a day earlier.
Gold is used as an alternative investment during times of political and financial uncertainty. Spot gold had gained 0.8 percent to $1,265.59 per ounce by 1213 GMT, the highest since May 1.
US gold futures gained 0.7 percent to $1,265.40 an ounce. “The headwinds are coming from US monetary policy. We do expect a rate hike in June and we see the dollar strengthening again. On the upside, there is a lot of uncertainty, which keeps people from selling gold and maybe causing a little bit of buying.”
The big data points for the day will be the first quarter gross domestic product (GDP) figures from the US as well as the durable goods figures, Jordan Eliseo, chief economist at ABC Bullion, said.
“We did issue a buy recommendation on gold some two days ago and will stick with that for the time being, especially considering how well the complex held up in Thursday’s session against a variety of headwinds,” INTL FCStone analyst Edward Meir said in a note.
The dollar was slightly weaker against the euro, which boosts the buying power of euro zone gold investors.

Source: Arab News