LONDON: Gold hit a more than one-week high on Monday as buyers hedged against persistent tensions in the Middle East and impeachment proceedings against US President Donald Trump, while deficit-hit palladium’s record run showed no signs of abating.

Spot gold was up 0.2 per cent to $1,559.99 per ounce by 1514 GMT, having earlier touched its highest since Jan 10 at $1,562.51. US gold futures were little changed at $1,560.20.

“Investors are flocking towards gold in spite of a spike in equity markets, mostly because of long-term uncertainties like political insecurity, probable equity market volatility..., weak earnings expectations and ultra-low interest rates,” Commerzbank analyst Eugen Weinberg said.

Investors are pouring money into gold-backed exchange-traded funds (ETF) and central banks are buying the metal at record rates, Weinberg added.

Holdings of the world’s largest gold-backed ETF, SPDR Gold Trust, rose to 898.82 tonnes on Friday, the highest since Nov 11.

Investors kept a close eye on developments in the Middle East after a military blockade led to the shutdown of oil facilities in Libya, sending oil prices to a more than one-week high on Monday.

That followed an attack by Iran-aligned Houthis on a military training camp in Yemen on Saturday.

The Fed cut interest rates three times last year before deciding to stand pat.

On the technical front, gold is consolidating above the $1,550 support, ActivTrades chief analyst Carlo Alberto De Casa, said in a note.

A clear break above $1,562 an ounce could set gold up for further gains, with the first target around $1,577, followed by resistance near $1,593 and then the seven-year peak around $1,611, the note added.

Scarce autocatalyst metal palladium was up about 0.1pc to $2,482.24 per ounce after earlier hitting a record high of $2,582.19. “Looking ahead to the next few months, the picture is slightly less pronounced: the forward curve is falling sharply, meaning that market participants expect the (tight supply)situation to ease somewhat,” Commerzbank said in a note.

Silver rose 0.3pc to $18.06, while platinum was up about 0.5pc to $1,012.55 per ounce.

Published in Dawn, January 21st, 2020