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By Sethuraman N R
(Reuters) – Gold prices reached their highest level in more than two months on Monday as US-China trade tensions and the threat of tariffs imposed by Washington on Mexico fueled concerns over the global recession and pushed investors to take refuge in safe havens.
Spot gold was up 0.7% to $ 1,314.11 at 7:46 pm GMT, after hitting its highest level since March 27 at $ 1,314.33.
US futures on gold rose 0.6% to $ 1,319.40 an ounce.
"We are seeing a lot of traditional safe-haven hedges … coming back to the fray," said Stephen Innes, Managing Partner, SPI Asset Management.
"The (equity) markets seemed a little complacent, and what caught them off guard is that Trump doubled its value, signaling that (transactions between countries) on the war front. commercial will be quite aggressive. "
US equity futures, Asian equity markets and oil prices slid to lows of several months Monday amid growing concerns of trade.
Tensions between the United States and China increased over the weekend when the two countries clashed for reasons of trade, technology and security.
"The (gold) markets are under-positioned and that's why we see investors aggressively following prices, bets are being made on a more aggressive rate cut, another reason why we are seeing price increases, "Innes said.
Signs that the Sino-US frictions weigh heavily on the global economy, South Korea's exports fell 9.4% in May, which is worse than a median forecast of 5.6%, according to the figures. published on Saturday.
The dark outlook has pushed traders to believe that the US Federal Reserve will lower interest rates as soon as possible.
"Gold has finally behaved like a haven of peace last week." It leapt forward after the escalation of the trade war that led to a red code for global growth said Edward Moya, Senior Market Analyst at OANDA.
Gold prices have surpassed the key level of $ 1,300 for the first time since April April, after being stuck in a range of nearly $ 20 for weeks.
Hedge funds and money managers increased their net long positions on COMEX gold in the week to May 28, according to the data.
Indicating rising investor interest in gold, the holdings of SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, rose 0.32% to 743.21 tonnes on Friday. from Thursday.
Spot Gold could test a resistance at $ 1,315 an ounce, a break above which could result in a gain in the range of $ 1,321 to $ 1,330, according to the analyst Reuters Wang Tao technique.
In other precious metals, silver edged up 0.3% to $ 14.65 an ounce; platinum rose 1% to $ 799.28 an ounce, after falling to its lowest level since February 15 at $ 784.42; and palladium rose 1% to $ 1,337.50 an ounce.
(Report by Nallur Sethuraman in Bengaluru, edited by Joseph Radford and Richard Pullin)
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