Gold is extending its rally toward the biggest monthly advance since the U.K. voted to leave the European Union in June 2016.
Prices have surged to the highest since 2013 on expectations for looser monetary policy, rising geopolitical tensions and slower global growth as the trade war between the U.S. and China drags on. Gold’s posting a strong June ahead of a highly anticipated meeting Saturday between Presidents Donald Trump and Xi Jinping in Japan, with investors watching if the two nations will be able to resolve their differences.
Bullion’s gains gathered pace last week after the Federal Reserve opened the door to a U.S. interest rate cut and other central banks also pivoted to a more dovish stance. Because global macroeconomic headwinds are simultaneously gaining intensity, Bank of America analysts including Michael Widmer expect the dollar to decline, further boosting demand for gold and possibly sending the metal to $1,500 an ounce in the next twelve months.
“Bonds and shares at higher — and concerning — levels is another factor, as are fears around trade disputes,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty. “The ‘lines in the sand’ for gold are at $1,380 and $1,430. A breach of either of these levels would give an indication of near-term direction. If the meeting between Presidents Xi and Trump is unfruitful, we may see a test of $1,430 next week.”
Gold futures for August delivery rose 0.2% to $1,414.60 an ounce at 11:02 a.m. in New York on the Comex and is up 7.9% this month. Prices reached as high as $1,442.90 on Tuesday.