December 30, 2019 / 4:39 AM / 24 days ago

PRECIOUS-Gold hits 2-mth peak on dollar weakness, U.S. air strikes

 (Updates prices)
    * U.S. military carry air strikes in Iraq and Syria
    * SPDR Gold holdings rise to highest since Nov. 29
    * GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl

    By Sumita Layek
    Dec 30 (Reuters) - Gold prices rose to their highest in more
than two months on Monday in thin year-end trading as the dollar
dipped and U.S. military strikes in the Middle East supported
safe-haven buying.
    Spot gold        was up 0.2% to $1,513.30 per ounce at 0757
GMT after hitting its highest level since Oct. 25 at $1,515.80.
U.S. gold futures         were down 0.1% at$1,516.90.
    "We are looking at pre-positioning for next year and a
rebalancing of portfolios ahead of year-end, overlaid with very
low liquidity levels, that are essentially exacerbating the
volatility," said Ilya Spivak, a senior currency strategist at
DailyFx.
    Gold is receiving modest support from the U.S. air strikes
in the Middle East, Spivak said.
    The U.S. military on Sunday carried out air strikes in Iraq
and Syria against an Iran-backed militia group.             
            
    Gold is considered a safe investment in times of
geopolitical and economic uncertainty.
    The dollar also slipped against a basket of rivals, making
gold cheaper for holders of other currencies.       
    Gold prices have risen nearly 18% this year and are on track
for their best year since 2010, mainly due to a 17-month-long
Sino-U.S. tariff war and its impact on global economic growth.  
    "But from a pure macro and risk perspective, it currently
makes little sense for gold to be trading above $1,500/oz. A
surging equity market and higher gold prices seldom, if ever,
exist in the same timeframe and simultaneously move higher,"
Stephen Innes, a market strategist at AxiTrader, said in a note.
  
    On the trade front, China's Commerce Ministry on Sunday said
it has "proactively dealt with" trade frictions with the United
States this year.             
    Market participants, however, remain wary even as Washington
and Beijing move close to ratifying a trade deal.               
 
    Indicative of investor sentiment, holdings of the world's
largest gold-backed exchange-traded fund, SPDR Gold Trust      ,
rose 0.1% to 893.25 tonnes on Friday, its highest since Nov. 29.
         
    Among other precious metals, silver        rose 0.9%
to$17.91 per ounce, while platinum        climbed 0.8% to
$951.90. Palladium        rose 0.2% to $1,908.11 per ounce.

 (Reporting by Sumita Layek in Bengaluru; Editing by Shailesh
Kuber)
  
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