Gold Advanced to its Highest Level in Three Weeks on Iraq Unrest

by on August 8, 2014 8:07 am BST

XAUUSD advanced to the highest level in three weeks, poised to snap the longest run of weekly losses since September, as haven demand increased on unrest in the Middle East and tension over Ukraine.

XAUUSD for immediate delivery rose as much as 0.7 percent to $1,322.14 an ounce, the highest since July 18, and was at $1,321.98 by 2:44 p.m. in Singapore. The metal reversed a 0.3 percent loss after U.S. President Barack Obama authorized air strikes in Iraq. A fourth day of gains would be the longest rally since June.

Fighting in Ukraine and the Middle East helped gold rebound this year from the biggest drop in more than three decades. Russia banned agriculture imports from the U.S. and European Union in retaliation over sanctions and is considering barring European and North American airlines from flying over Siberia. Israel said a cease-fire with Hamas forces in Gaza was violated hours before it was due to expire.

Gold has risen 2.2 percent this week even as the dollar reached a nine-month high against the euro on signs the U.S. is recovering while Europe’s economy falters. Prices dropped for the previous three weeks. European Central Bank President Mario Draghi yesterday signaled monetary policy will diverge from the U.S. for an extended period of time.

Data this week showed German factory orders fell and Italy returned to recession, while in the U.S., reports showed gains in factory and services output.

Gold for December delivery increased as much as 0.8 percent to $1,323.50 an ounce on the Comex, the highest since July 18, and traded at $1,323.30, up 2.2 percent this week. Holdings in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, were unchanged yesterday.

Bullion priced in euros reached the highest since March today. The metal denominated in pounds climbed to the highest since April.

Silver for immediate delivery advanced 0.6 percent to $20.0835 an ounce, trimming a fourth weekly decline that’s the longest such run since November.

Spot platinum climbed as much as 0.4 percent to $1,485.13 an ounce, the highest since July 29 and is poised to halt three weeks of losses, the longest such stretch since March.

Palladium increased 0.3 percent to $859.69 an ounce, paring a third weekly drop, the longest slump since September.