WASHINGTON: Gold prices jumped 1pc on Wednesday to their highest in more than six years, as the trade war between China and the United States showed no signs of abating, spurring investors to seek refuge in safe-haven assets.
Spot gold was up 1.1pc at $1,490.57 per ounce as of 0718 GMT, its highest since April 2013.
US gold futures climbed 1.2pc to $1,501.50 an ounce.
“Trade wars are the catalyst for the latest gains. Increasingly fiery rhetoric out of Washington and Beijing is fuelling worries that the conflict will amount to a longer-term headwind for global growth,” Ilya Spivak, senior currency strategist with DailyFx said.
“Near-term, a daily close above resistance at $1,492.31 per ounce would expose the next upside hurdles at $1,513.94 and $1,540.70.”
The world’s two-largest economies are locked in a bitter trade tussle that rapidly escalated late last week when US President Donald Trump said he would impose additional tariffs on Chinese goods.
On Monday, China responded by allowing its currency to weaken past the psychologically important level of 7 per dollar, which prompted Washington to label Beijing a currency manipulator.
Meanwhile, White House economic adviser Larry Kudlow said the Trump administration wants to continue trade talks with China and is still planning to host a Chinese delegation for talks in September.
However, Goldman Sachs said it no longer expects a trade deal to be struck before the November 2020 US presidential election, while Morgan Stanley warned that more tit-for-tat tariffs could tip the world economy into recession by the middle of next year.
A Federal Reserve official said it was appropriate to “wait and see” how the upcoming data was, before deciding whether rates should be cut again at the central bank’s next meeting in September.
Lower US interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.
Lending support to bullion’s rally, the dollar fell 0.1pc on Wednesday, holding near a two-week low touched in the previous session, while yields on 10-year US Treasuries were down close to their lowest in almost three years.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.21pc to 836.92 tonnes on Tuesday from Monday.
Spot gold may test a resistance at $1,497 per ounce, a break above which could lead to a gain to $1,524, according to Reuters technical analyst Wang Tao.
Other precious metals also rose, with silver gaining 1.8pc to $16.74 per ounce, its highest since June 2018.
Platinum gained 0.9pc to $854.88 an ounce and palladium climbed 0.5pc to $1,443.62 an ounce.