Gold prices rise to two-week high on US debt concerns, Middle East geopolitical tensions
Gold prices continued to rise sharply in Asia on Thursday, hitting a two-week high, boosted by safe-haven demand amid rising US debt and rising geopolitical tensions in the Middle East.
Spot gold rose 0.7% to $3,338.04 an ounce, while June gold futures rose 0.8% to $3,339.20 an ounce by 01:27 ET (05:27 GMT).
US debt concerns continue to weigh on financial markets
Investor sentiment is being weighed down by concerns over the US debt situation after Moody's recently warned of a possible downgrade of the country's credit rating. Pressure is mounting on the US dollar and bond markets as investors rush out of riskier assets and into gold, a traditional investment in times of uncertainty.
Wednesday's auction of $16 billion worth of 20-year US Treasury notes saw a sharp drop in demand, reflecting growing investor caution over US debt.
Meanwhile, the US House of Representatives is preparing to vote on a bill to cut taxes and increase spending, including on defence and border controls. Analysts warn that the move could widen the budget deficit, heighten financial risks and bolster demand for gold as a hedge.
Middle East tensions support gold's rise
News that Israel is ready to attack Iran if nuclear talks fail has added to investors' concerns. Although Washington and Tehran have agreed to further talks, the risk of an escalation in the conflict remains, helping to keep gold prices high.
Weakening US dollar helps other precious metals rise
Platinum and silver also recorded positive gains. Specifically:
Platinum futures rose 0.4% to $1,082.20 an ounce.
Silver futures rose 0.7% to $33.873 an ounce.
The weakness of the US dollar this week has made precious metals more attractive to global investors.
Copper prices rise on expectations of economic stimulus from China
In the group of industrial metals, copper prices continued to rise as the market expected China - the world's largest copper consumer - to implement further economic stimulus measures.
Copper futures on the London Metal Exchange rose 0.2% to $9,545.50 a tonne.
US copper futures rose 1.3% to $4.7175 a pound.
The People's Bank of China's cut in its benchmark lending rate earlier this week was a positive sign, raising expectations that the Chinese government will continue to ease monetary policy to support growth.
Meanwhile, investors are closely watching developments in the US-China trade talks, after the two sides reached a temporary truce last week.
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