Gold prices rise as Italy crisis drives safe-haven buying

Gold prices edged higher in early Asian trade on Wednesday as political turmoil in Italy and concerns over Sino-U.S. trade conflict spurred safe-haven demand.

Spot gold had risen 0.3 percent to $1,301.98 per ounce by 0125 GMT. U.S. gold futures for June delivery were up 0.2 percent at $1,301.50 per ounce.

Italy may hold repeat elections as early as July after the man asked to be prime minister failed to secure support from major political parties for even a stop-gap government, sources said on Tuesday, as markets tumbled on the growing political turmoil.

The United States said on Tuesday that it still holds the threat of imposing tariffs on $50 billion of imports from China and will use it unless Beijing addresses the issue of theft of American intellectual property.

Asian shares looked set for a sharp fall on Wednesday as Italy’s political crisis provoked a sell-off on Wall Street, sent the euro to a 10-month low and spiked borrowing costs for the government in Rome.

U.S. benchmark 10-year Treasury yields posted their largest one-day drop on Tuesday since Britain voted to exit the European Union nearly two years ago.

The U.S. Federal Reserve will have difficulty raising interest rates significantly beyond the settings of its Japanese and European counterparts, which are still pursuing accommodative policy, St. Louis Fed President James Bullard said on Tuesday.

U.S. interest rates futures rallied on Tuesday as traders slashed their expectations that the Federal Reserve would raise key overnight borrowing costs three more times in 2018 as Italy’s political situation threatens European economic growth.

A top North Korean official was headed to New York on Tuesday for talks with U.S. Secretary of State Mike Pompeo.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.35 percent to 851.45 tonnes on Tuesday.

Shandong Gold Group, China’s largest gold producer, is hunting for gold around the world and is “looking forward to investing in Peru”, the chairman of the company said during a presentation Tuesday.

Source: Reuters