LONDON- Gold prices scaled a two-week peak on Monday as the dollar slid to a six-week low after a G20 weekend summit dominated by the U.S. administration’s protectionist stance on global trade.
The precious metal has been rising since Wednesday, when the dollar dropped after the U.S. Federal Reserve raised interest rates but stopped short of predicting a sharper acceleration in monetary tightening over the next two years.
Gold is sensitive to falling interest rates, which reduces the opportunity cost of holding non-yielding bullion. “Overall the geopolitical outlook still points to several hotspots … and we’re not going to see a focus on rate rises for the foreseeable future now, because that’s out the way. Over the next few weeks one has to favour the upside,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Spot gold rose 0.3 percent to $1,231.45 an ounce by 1450 GMT, after touching $1,235.50, its highest since March 6. U.S. gold futures gained 0.1 percent to $1,231.80.
Breaking a decade-long tradition of endorsing open trade, G20 finance ministers and central bankers made only a token reference to trade at the weekend, acquiescing to an increasingly protectionist United States.
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