Finance Finance News Gold nears two-week high amid worries about Iraq

Gold nears two-week high amid worries about Iraq

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Gold prices have risen to within striking distance of a 10-week high as some investors breath easier after the Federal Reserve stuck to a dovish monetary policy while others buy the precious metal amid worries about Iraq.

Gold for August delivery, the most active contract, on Friday rose $US2.50, or 0.2 per cent, to settle at $US1,316.60 a troy ounce on the Comex division of the New York Mercantile Exchange. This was gold’s highest settlement since April 14.

Gold futures locked in their biggest daily gain in nine months on Thursday, a day after the Federal Reserve reiterated plans to keep interest rates near zero for a long time after it winds down its bond-buying program. Gold doesn’t earn interest and has an easier time competing with interest-bearing assets like Treasury bonds when rates are low.

Some investors had pared their gold holdings ahead of the Fed announcement, fearing a more hawkish stance from the central bank, and returned to the market after the perceived danger passed, brokers said.

Gold prices continued their rally on Friday, as the recent gains caught the attention of some investors, said George Gero, a senior vice president with RBC Capital Markets Global Futures.

“Funds have customers asking, especially after yesterday’s move, whether they have gold in their portfolios,” Gero said.

Gold traders also kept an eye on Iraq, where government forces continue to push back against insurgents in the country’s north.

“The geopolitical tensions in Iraq obviously helped (gold) break though some important levels,” said Graham Leighton, a precious-metals broker with Marex Spectron in New York.

Some investors buy the metal as a hedge because they believe gold will keep its value better than other assets during periods of geopolitical instability as it has no ties to a specific country or government.

Settlements (ranges include open-outcry and electronic trading):

London PM Gold Fix: $US1,312.50; previous PM $US1,293.00

Aug $US1,316.60, up $US2.50; Range $US1,307.10-$US1,322.50

Jul silver $US20.949, up 30.1 cents; Range $US20.580-$US20.990

Jul platinum $US1,457.30, down $US17.20; Range $US1,452.10-$US1,474.50

Sep palladium $US822.20, down $US16.40; Range $US818.95-$US838.50