Published: Fri, April 14, 2017
Finance | By Laverne Griffith

Gold contract surges to five-month high amid rising global tensions

Bullion rose 0.2 percent on Wednesday, April 12 to $1,274 per troy ounce as of 9:40am GMT after earlier reaching its highest level since November 10 a year ago of $1,279.85. Tarnishing an otherwise brightening outlook for global growth, tensions continued to boil in the Korean peninsula and the Middle East, while the upcoming French presidential election also anxious investors.

Geopolitical uncertainty, particularly surrounding USA tensions with North Korea, helped boost demand for investments considered less risky, such as gold.

Futures on the precious metal jumped 1.6 percent during the regular session, bringing their year-to-date gain to above 10 percent. While gold may extend gains in the next few weeks, better US data and higher real interest rates will then push prices lower, Goldman Sachs Group Inc. said.

Bullion touched a five-month high Wednesday. US gold futures climbed 0.7 percent to $1,287.50.

Investors also bought the Japanese yen and US Treasuries, while the dollar index softened and stocks took a knock. On Tuesday North Korea warned of a nuclear attack on the United States at any sign of American aggression, as a U.S. Navy strike group steamed toward the western Pacific.

Trump's comments on the dollar were enough of an impetus to push gold above $1,280, with $1,300 the next key level and the 200-day moving average providing crucial support, said MKS PAMP Group trader Jason Cerisola.

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Spot gold was mostly unchanged at $1,273.51 per ounce by 1016 GMT. Russian President Vladimir Putin said on Wednesday trust had eroded between the United States and Russia under Trump as Moscow delivered an unusually hostile reception to Secretary of State Rex Tillerson in a face-off over Syria.

Trading volumes in wider markets have been light ahead of Easter, with most financial markets closed from the Good Friday holiday.

The uncertainty is supporting physical demand for gold, with holdings in SPDR Gold Shares, the largest exchange-traded fund backed by gold, rising 4.2 metric tons to 842.4 tons as of Tuesday.

Among other precious metals, silver was flat at $18.46, off an earlier five-month high of $18.599. Tensions have been high after North Korea recently launched ballistic missiles.

In commodities, the May crude contract climbed for a sixth day in a row, up 32 cents at US$53.40 per barrel, while the May natural gas contract fell nine cents at US$3.15 per mmBTU.

Meanwhile, platinum shed 0.05%, at $974 per ounce while palladium declined 0.37% to $799.50 per ounce.

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