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PRECIOUS-Gold scales six-year peak on trade jitters, eyes $1,500

Published 2019-08-07, 08:45 a/m
© Reuters.  PRECIOUS-Gold scales six-year peak on trade jitters, eyes $1,500
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* SPDR Gold holdings rise to highest in over a year

* Gold hits record high in various major currencies

* Silver jumps to more than one-year high

* 10-year U.S. Treasury yield near three-year low (Updates prices)

By K. Sathya Narayanan

Aug 7 (Reuters) - Gold scaled a six-year peak on Wednesday to within striking distance of $1,500 as investors continued to pile into safe havens to hedge against heightened U.S.-China trade tensions.

Spot gold XAU= was up 1.5% at $1,496.05 per ounce at 1205 GMT, having touched $1,498.57, its highest since April 2013.

U.S. gold futures GCcv1 climbed 1.7% to $1,508.80, surpassing $1,500 for the first time in more than six years.

The world's two largest economies have been locked for over a year in a bitter trade tussle, which rapidly escalated last week when U.S. President Donald Trump said he would impose additional tariffs on Chinese goods. Monday, China responded by allowing its currency to weaken past the 7 per dollar mark, prompting Washington to label Beijing a currency manipulator. escalation in trade tension is the key backdrop supporting gold prices and the other crucial factor is the massive increase in negative yielding debt," Capital Economics analyst Ross Strachan said.

The 10-year U.S. Treasury yield fell to its lowest since 2016. US/

On Tuesday, euro zone government bond yields slumped to record lows, while Dutch 30-year and Irish 10-year yields turned negative for the first time on Monday. Street bank Goldman Sachs (NYSE:GS) said it no longer expects a trade deal to be struck before the 2020 U.S. presidential election, and Morgan Stanley (NYSE:MS) warned that more tit-for-tat tariffs could tip the world economy into recession by the middle of next year. White House economic adviser Larry Kudlow said the Trump administration wanted to continue talks with China and still planned to host a Chinese delegation in September, which offered some respite to global stock markets. MKTS/GLOB

"Gold is quite clearly still in demand as a safe haven in the current market environment ... The market has now priced in three further rate cuts (by the U.S. Federal Reserve) this year," Commerzbank (DE:CBKG) analyst Daniel Briesemann said in a note.

A Fed official said it was appropriate to "wait and see" upcoming data, before deciding whether rates should be cut again in September. gold denominated in the British pound XAUGBP=R , Japanese yen XAUJPY=R , Australian dollar XAUAUD=R and Indian rupee MAUc1 hit their highest on record.

Holdings HLDSPDRGT=XAU of the largest gold-backed exchange-traded fund, SPDR Gold Trust GLD , rose to 26.9 million ounces on Tuesday, their highest since May 2018. GOL/ETF

Silver XAG= gained 3% to $16.93 per ounce, after touching its highest since June 2018. Platinum XPT= rose 1.3% to $858.70 an ounce, while palladium XPD= slipped 0.4% to $1,431.63.

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