Investing.com - Gold prices surged around 1% on Monday to reach the highest level in three months as a combination of concerns over rising U.S. yields and the impact of trade conflict, along with geopolitical risks and a weaker dollar, underpinned demand for the precious metal.
December gold futures were up $13.00 or 1.06% to $1,234.90 by 08:36 AM ET (12:36 GMT) on the Comex division of the New York Mercantile Exchange after rising as high as $1,236.90 earlier, the most since mid-July.
Gold prices gained around 1.4% last week, despite slipping on Friday, notching up a second-straight weekly increase.
Safe-haven demand for gold was boosted amid steep declines in global stock markets as investors dumped assets perceived as riskier.
Global equity markets failed to rebound on Monday, despite Friday’s gains on Wall Street after a sharp selloff last week triggered by worries over rising U.S. yields and concerns that trade wars are starting to act as a drag on global growth.
Treasury yields started to climb earlier this month amid expectations for a faster-than-expected pace of rate hikes from the Federal Reserve as the outlook for the U.S. economy remains strong.
Heightened geopolitical risks from Brexit, the row over Italy’s budget and rising diplomatic tensions between Saudi Arabia and the West over the disappearance of a journalist also weighed on market sentiment.
Gold received an additional boost from the broadly weaker dollar, with the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, down 0.23% to 94.72.
A weaker dollar can make dollar-denominated assets, like gold, less expensive to potential buyers holding other currencies.
Expectations for rising interest rates look likely to remain a headwind for gold prices. Interest rate increases and higher U.S. bond yields dampen appeal for gold, which offers no yield. They also tend to boost the dollar.
Elsewhere in metals trading, December silver advanced 0.96% to $14.77 a troy ounce, while January platinum was trading at $853.30, up 1.57% for the day.
Among base metals, December copper added on 0.73% to trade at $2.821.