Gold hits 3-month high on softer dollar, Iraq violence

Singapore (July 1)  Gold climbed to a three-month high on Tuesday as a softer dollar and escalating violence in Iraq increased the metal's appeal, boosting inflows into the top bullion-backed fund.
Spot gold climbed to $1,332.10 an ounce, its highest since March 24, and was flat at $1,327.00 by 0621 GMT. It gained nearly 1 percent in the previous session.
 The metal posted its second straight quarterly gain for the
quarter that ended on Monday, and June was also its best month
since February.
    "This quarter, we expect gold to remain elevated or even
possibly climb due to multiple uncertainties," said Howie Lee,
investment analyst at Phillip Futures, adding that uncertainties
over the U.S. economic recovery and geopolitical tensions would
provide support for gold.
    Lee also expects the technical picture for gold in the third
quarter to be positive. Resistance is expected at $1,365 and
support at $1,189.
    On Tuesday, gold's appeal was burnished as the dollar
languished at seven-week lows against a basket of major
currencies, hurt by doubts about the strength of the U.S.
economic recovery.
    A weaker greenback makes dollar-denominated gold cheaper for
holders of other currencies.
    Gold was also supported by safe-haven bids from geopolitical
tensions. Iraqi troops battled to dislodge an al Qaeda splinter
group from the city of Tikrit on Monday after its leader was
declared caliph of a new Islamic state in lands seized this
month across a swath of Iraq and Syria.
    Ukrainian President Petro Poroshenko said on Tuesday
government forces would renew offensive operations against
pro-Russian rebels and "free our lands", hours after a ceasefire
to make way for peace talks with the rebels had expired.
 
    Tensions in Ukraine and Iraq have largely been responsible
for gold's 10 percent gain this year.
    The improving sentiment towards gold was reflected in SPDR
Gold Trust, the world's largest gold-backed
exchange-traded fund, which saw its holdings rise 5.68 tonnes to
790.70 tonnes on Monday - the biggest inflow in a month.
 
    In the physical markets, however, buyers were put off by the
recent price increase. In top consumer China, local prices
 fell to a discount of about $1 an ounce to global
prices on Tuesday from being on par in the previous session, in
a sign of weak demand.
    Platinum group metals were steady, following an end to a
crippling five-month strike in South African mines last week. 
    South Africa's Anglo American Platinum said on
Monday it was reviewing options for its Rustenburg operations,
which were hit by the strike.   

Source: Reuters