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Why gold prices have climbed to their highest since 2013



Dovish statements from global central banks recently are not the only reason why gold is rising past $ 1,400 an ounce this week to levels it has not seen in nearly six years.

"Gold is a global market and US monetary policy, while important, is not the only driving force for performance," said Juan Carlos Artigas, director of investment research at the World Gold Council, at MarketWatch on Friday.

At the macroeconomic level, there is "the combination of increased geopolitical tensions and a more accommodating monetary policy stance signaled by central banks, including [European Central Bank] and [U.S. Federal Reserve] which have pushed global interest rates down," he said.

The tensions between the US and China over trade policy continue, as dealers await an expected meeting and progress towards a resolution on the trade conflict between US President Donald Trump and Chinese President Xi Jinping at the group's 20th leaders summit on 28-28. June.

Meanwhile, Trump said Friday that he was ready to perform odors against Iranian targets in return for Iran's move to shoot down an American drone, but renounced the strikes.

"Further tensions in the Middle East could offer gold prices higher through the demand for short-term demand," said Maxwell Gold, director of investment strategy at Aberdeen Standard Investments, although "key factors in gold control right now are rates and recession fears." 1

9659002] Potential gold headwinds would include any "hawkish signaling from the Fed or an immediate solution to the US and China trade war," which would probably contribute to the strength of the dollar, Gold said.

On Friday gold futures to August delivery

GCQ19, + 0.38%

the most active contract settled at $ 1,400.10 an ounce on Comex, after touching an intraday high of $ 1,415.40. Prices are at their highest level since September 2013, according to FactSet data.

Read: The gold monster race could reach $ 1,600, says Citi analysts

The gold collection did not come as a surprise to George Milling-Stanley, head of gold strategy at State Street Global Advisors. "The only surprise in recent gold movements was that there was no significant profit based on speculative interests as gold ran up the $ 1,350 level."

This movement in gold has been many months in the making .. & # 39;


George Milling-Stanley, State Street Global Advisors

He said he did not want to diminish the importance of apparent shift in Fed policy towards a more deaf-minded attitude than earlier this year, but "this move in gold has been going on for many months."

If gold develops enough momentum to attract speculators in significant numbers, prices may rise "significantly higher than $ 1,400 over the next six to 18 months," he added.

New markets have been the key to the gold's rise, given the "resilience" continued strengthening of "pure" gold investment needs, and their recent significant increase in central purchasers' metal purchases, Milling-Stanley said.

"In other parts of the world, gold is backed by growing nervousness over the opportunities for equity markets after nine years of growth along with rising fears of recession, with bond markets with confusing signals," he said.

Gold has also found support from a technical perspective, according to Artigas. "Gold broke important multi-year resistance levels, and positioning in both futures and options has become more and more bullish in recent weeks."

Bullish sentiment is also seen in net purchases through gold-backed exchange-traded funds of $ 3.5 billion in inflows worldwide month-to-date June 20, he said. On Friday, SPDR Gold Shares

GLD, + 0.80% acted 0.5%.

Looking ahead, "we need to wait and see how investors, both strategic and tactical, behave in the coming weeks to determine the strength of the rally," Artigas said.

"Key trends to see include developments in trade negotiations between the United States, China and other nations, tensions with Iran, European policy – including Brexit and forward-looking guidance from the Fed and other central banks on how monetary policy can be adapted to these conditions," he.


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