Gold Heads for Biggest Monthly Gain Since 2016

By BLOOMBERG

Gold extended its rally and is set for the biggest monthly climb since 2016 ahead of the highly anticipated U.S.-China presidential meeting Saturday.

Prices have surged to the highest since 2013 on expectations for looser monetary policy, rising geopolitical tensions and slower global growth amid a prolonged U.S.-China trade war. The meeting between Presidents Donald Trump and Xi Jinping in Japan could determine the next chapter in their dispute.

Bullion’s gains gathered pace last week after the Federal Reserve opened the door to a U.S. interest rate cut and other central banks, including the European Central Bank, also pivoted to a more dovish stance. The rally has been further fueled by an escalation in U.S.-Iran tensions and concerns that trade disputes are harming global growth. The clear signaling of lower interest rates for longer and weakness in the dollar are important supportive factors for gold, said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty.

“Bonds and shares at higher — and concerning — levels is another factor, as are fears around trade disputes,” McCarthy said. “The ‘lines in the sand’ for gold are at $1,380 and $1,430. A breach of either of these levels would give an indication of near term direction. If the meeting between Presidents Xi and Trump is unfruitful, we may see a test of $1,430 next week.”

Spot gold rose 0.9% to $1,422.24 an ounce at 10:06 a.m. in Singapore and is up 9% this month, the most since February 2016. Prices touched $1,439.21 on Tuesday, the highest since 2013. Holdings in gold-backed exchange-traded funds are at the highest since 2013 and have increased the most since June 2016 this month, according to data compiled by Bloomberg. A gauge of the U.S. dollar is down 1.6% this month.

In other precious metals, spot silver advanced 0.4%, platinum climbed 0.5% and palladium gained 0.8%. — Bloomberg