Gold hits six year high as trade, growth concerns boost demand

Goldprices jumped more than 1per cent to their highest in more than six years on Monday, as the escalating trade war between the United States and China along with global growth worries drove investors towards safe haven assets.

Spot gold was up 1.1per cent at $1,456.51 per ounce as of 0725 GMT,after hitting its highest since May 2013 at $1,459.47 earlier in the session.

US goldfutures rose 0.8 per cent to $1,468.50 an ounce.

"Goldis certainly benefiting from the global concerns about the outlook for growth, and central banks are likely to maintain their accommodative stance, so safe havens likegoldare in demand," said Michael McCarthy, chief market strategist, CMC Markets.

"Trade tensions between the US and China are an important factor, the potential for escalation is very high ... we might not get what markets are fearing, but it is all adding to the real concerns about the outlook for growth assets."

On Friday, China said it will fight back against US President Donald Trump's decision to impose an additional 10% tariff on $300 billion worth of Chinese imports.

The tariffs may force the Federal Reserve to cut interest rates more than it had hoped was necessary to protect the USeconomy from trade policy risks.

Meanwhile, recent economic readings from the US cemented expectations that the Fed will cut interest rates again in September after it delivered its first rate reduction in more than a decade last month.

Lower interest rates decrease the opportunity cost of holding on yielding bullion and weigh on the dollar.

Helping the bullion's appeal, the dollar index touched a one week low, makinggoldcheaper for investors holding other currencies.

Adding to the global economic gloom, China's services sector expanded at the slowest pace in five months in July despite a sharp upturn of new export orders, a private survey showed on Monday.

"Near-term outlook forgoldlooks positive. All this volatility, growth fears, persistent weakness in economic data will be good enough for risk off environment," said Benjamin Lu, an analyst at Phillip Futures.

Further helpinggold's allure, Asian shares slid to 6 1/2 month lows on Monday.

On the technical front, spotgoldmay climb to a range of $1,461 $1,474 per ounce, said Reuters technical analyst Wang Tao.

Holdings of SPDRGoldTrust, the world's largestgold backed exchange traded fund, rose 0.36per cent to 830.76 tonnes on Friday from Thursday.

Hedge funds and money managers raised their bullish stance in COMEXgoldand silver contracts in the week to July 30, the U.S. Commodity Futures Trading Commission said on Friday.

Elsewhere, silver gained 1.9 per cent to $16.51 per ounce and platinum climbed 1.4per cent to $854.33.

Palladium rose 1per cent to $1,420.60 an ounce.