Gold surged to its highest level in nearly six years on Monday as the prospects of lower Federal Reserve rates and lingering geopolitical tensions between the U.S. and Iran made the precious metal more attractive to traders.
Gold futures for August delivery traded as high as $1,417.70 per ounce, highest mark since reaching $1,418.60 on Aug. 29, 2013. The precious metal traded more than 1% higher as of 11:30 a.m. ET.
“The geopolitical tensions and an expectation of a more dovish Fed pushed investors to increase their gold exposure,” Mark Keenan, global commodities specialist at Societe Generale, said in a note. “Gold continues to be extremely overbought with short positions staying at their yearly lows and long positions climbing to their highest level since February 2018.”
“This extreme positioning is likely to linger as [Fed Chair] Jerome Powell reassured markets about the Fed’s capacity and willingness to support economic expansion with rate cuts and other unconventional management tools,” Keenan said.
The precious metal is up more than 9% for the year and is on track for its biggest one-year gain since 2017, when it rose 13.7%.
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