Gold prices gained more than a week high on Monday because of the increasing fears that the trade war will continue to escalate, lifting appetite of investors on assets that are seen as a safe haven from risks. Hopes are high of a Federal Reserve rate cut as the data of the United States economy shows weakening.
Spot Gold gained .1 percent higher to $1,286.21 per ounce as of 0714 GMT, touching $1,287.32, its highest since May 17, earlier in the session. United States gold futures increased by 0.2%, to $1,285.60 an ounce.
Benjamin Lu, an analyst with Singapore-based Phillip Futures, said that gold has really reversed earlier losses as risk appetite in the market remains rather shaky. He added that the United States sanctions on Huawei and even the rest of the Chinese technology firms have really aggravated trade tensions.
The weak economic data of the United States last week showed that the escalating trade-war with China is starting to affect the country's economy. It also raised the possibility that the Federal Reserve will impose rate cuts.
United States President Donald Trump complained over the weekend that the Federal Reserve's policies are keeping the growth of the United States from reaching its full potential.
According to David Song, Currency Strategist at DailyFX, the prices of Gold may continue to consolidate following the failed attempt to test the monthly-low ($1266). He, however, said that fresh developments coming out of the U.S. may drag on bullion if the data prints encourage the Federal Reserve to retain a wait-and-see approach for monetary policy.
Reuters Technical analyst Wang Tao said that gold may retest resistance at $1,290 an ounce, a break above which could lead to again to the next resistance at $1,295.
On Friday, China condemned U.S. Secretary of State Mike Pompeo statement saying that the chief executive of China's Huawei Technologies Co. Ltd lied about the ties of the company to the Chinese government.
Gold prices are also affected by the uncertainties which emerged after British Prime Minister Theresa May announced that she would quit after she failed to deliver Brexit, opening the competition on the seat for Britain's prime minister.
According to Alfonso Esparza, senior market analyst at OANDA, The rise of volatility triggered by geopolitics benefited the yellow metal. He added that if the UK political game of thrones and U.S.-China trade keep uncertainty levels high, gold could once again jump above $1,300.
