Gold price hits 3-month high on softer dollar, Iraq violence
Gold posted its second straight quarterly gain for the quarter that ended on Monday, and June was also its best month since February.
Singapore: Gold climbed to a three-month high on Tuesday as a softer dollar and escalating violence in Iraq increased the metal`s appeal, boosting inflows into the top bullion-backed fund.
Spot gold climbed to USD 1,332.10 an ounce, its highest since March 24, and was flat at USD 1,327.41 by 0240 GMT. It gained nearly 1 percent in the previous session.
The metal posted its second straight quarterly gain for the quarter that ended on Monday, and June was also its best month since February.
"This quarter, we expect gold to remain elevated or even possibly climb due to multiple uncertainties," said Howie Lee, investment analyst at Phillip Futures, adding that uncertainties over the U.S. economic recovery and geopolitical tensions would provide support for gold.
Lee also expects the technical picture for gold in the third quarter to be positive. Resistance is expected at USD 1,365 and support at USD 1,189.
On Tuesday, gold`s appeal was burnished as the dollar languished at seven-week lows against a basket of major currencies, having extended a month-long decline after a recent batch of mixed data cast doubts on the strength of the U.S. economic recovery.
A weaker greenback makes dollar-denominated gold cheaper for holders of other currencies.
Gold was also supported by safe-haven bids from geopolitical tensions. Iraqi troops battled to dislodge an al Qaeda splinter group from the city of Tikrit on Monday after its leader was declared caliph of a new Islamic state in lands seized this month across a swath of Iraq and Syria.
Ukrainian President Petro Poroshenko said on Tuesday government forces would renew offensive operations against pro-Russian rebels and "free our lands", hours after a ceasefire to make way for peace talks with the rebels had expired.
Tensions in Ukraine and Iraq have largely been responsible for gold`s 10 percent gain this year.
The improving sentiment towards gold was reflected in SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, which saw its holdings rise 5.68 tonnes to 790.70 tonnes on Monday - the biggest inflow in a month.
In the physical markets, however, buyers were put off by the recent price increase. In top consumer China, local prices fell to a discount of about USD 1 an ounce to global prices on Tuesday from being on par in the previous session, in a sign of weak demand.
Platinum group metals were steady, following an end to a crippling five-month strike in South African mines last week.
South Africa`s Anglo American Platinum said on Monday it was reviewing options for its Rustenburg operations, which were hit by the strike.