Forexpros – Gold futures added to gains on Wednesday, rising to a seven-day high on renewed safe-haven buying amid growing geopolitical tensions between Iran and the U.S.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,610.65 a troy ounce during U.S. morning trade, gaining 0.63%.
It earlier rose by as much as 0.75% to trade at USD1,615.95 a troy ounce, the highest since December 22.
Gold futures were likely to find support at USD1,572.65 a troy ounce, the previous day’s low and resistance at USD1,643.65, the high of December 21.
Tensions between Iran and the U.S. appeared to be escalating after Iran’s military chief Ataollah Salehi warned the U.S. against sending naval ships back to the Persian Gulf, after leaving the area due to a ten-day naval exercise conducted by Iran’s navy.
The U.S. dismissed the warning, with Pentagon spokesman George Little saying earlier that “regularly scheduled movements” including through the Strait of Hormuz will continue as usual.
The Strait of Hormuz, located between Iran and Oman, is one of the most important oil-shipping channels in the world, handling about one-fifth of global oil supplies.
Gold prices found further support after crude oil futures rallied to an eight-month high of USD103.69 a barrel on the New York Mercantile Exchange.
Global financial service provider HSBC Holdings said in a report earlier, “With 40% of the world’s internationally traded oil moving through the Strait of Hormuz, even a low probability of the strait’s closure can have a material impact on oil and hence on gold prices.”
Higher oil prices tend to benefit gold as it enhances its appeal as a hedge against oil-led inflation.
Meanwhile, concerns over the euro zone’s debt crisis lingered after Germany sold EUR4.06 billion of 10-year bonds at an average yield of 1.93%, compared with 1.98% at November’s launch of the January 2022 bond, which was the worst German bond auction on record.
Adding to fears over the region’s debt woes, bank deposits at the European Central Bank’s overnight facility reached a new all-time high of EUR453 billion on Tuesday, underscoring the unwillingness of European lenders to lend to each other.
Elsewhere on the Comex, silver for March delivery retreated 1% to trade at USD29.24 a troy ounce, while copper for March delivery tumbled 2.15% to trade at USD3.452 a pound.
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