Gold jumps 1pc as attacks on Saudi lift safe-haven bets

Gold prices jumped 1pc on Monday as attacks on Saudi Arabia’s oil  facilities dented risk appetite, boosting demand for the safe-haven  bullion, while investors awaited for clues on monetary easing from major  central banks this week.

Spot  gold was up 1pc at $1,503.10 per ounce as of 0739 GMT. Prices had dipped  1.2pc in the previous week on hopes that an end to the U.S.-China trade  tiff could be near. US gold futures rose 0.8pc to $1,510.70 per ounce.

The  attacks on Saudi oil installations have lead to a rotation of interests  out of stocks and into safe-havens, said OANDA analyst Jeffrey Halley.

The  risk-averse sentiment in the market underpinned the bullion, often seen  as an alternative investment during times of political and financial  uncertainty. 

With escalating tensions in the Middle East and  hopes of more stimulus measures from major central banks, the next  target for gold will be $1,530, Halley added.

Yemen’s  Iran-backed Houthi rebel group claimed responsibility for the attack  over the weekend on the world’s biggest oil-processing facility.

However,  a senior U.S. official said that evidence indicated Tehran was behind  it, and President Donald Trump said the United States was “locked and  loaded” for a potential response to the attack, souring its already  strained relations with Iran. The event hurt risk sentiment in  the markets, with Asian equities trading lower, and the safe-haven yen  up 0.4pc against the dollar. 

Investors also await the outcome of  the US Federal Reserve and Bank of Japan’s policy meetings on  Wednesday, for signals on their future policy path.

“(The Saudi  attacks) are supportive for gold, but prices are still under pressure as  investors are awaiting the Fed’s announcement,” said Hareesh V, head of  commodity research at Geojit Financial Services, adding that $1,465 was  the current support level for gold.

Central banks globally are  facing increasing pressure to dole out monetary support for flagging  economies as the U.S.-China trade dispute hurt trade and business  sentiment. Lower interest rates reduce the opportunity cost of holding  non-yielding bullion and weigh on the dollar.

Dismal  Chinese data indicating that industrial production had grown at its  weakest pace in 17-1/2 years also weighed on market sentiment.

Spot  gold could retest resistance at $1,524 per ounce, as it has temporarily  bottomed around a support at $1,480, said Reuters technical analyst  Wang Tao.

Among other precious metals, silver jumped as much as  3pc to $18 an ounce and platinum was up 0.7pc at $954.34. Meanwhile,  palladium rose 1.2pc to $1,626.11 per ounce.