By Barani Krishnan
Investing.com - After weeks of moving back and forth on China and global economic concerns, gold had a real geopolitical boost Monday in the form of Middle East oil-security tensions. And that may be what's needed to put a floor under the yellow metal and prompt it back to $1,300 levels.
Spot gold, reflective of trades in bullion, was up 95 cents, or 0.1%, at $1,276.95 per ounce by 3:40 PM ET (19:40 GMT) reacting to the Trump Administration's decision to end sanction waivers for importers of Iranian oil.
Gold futures for June delivery, traded on the Comex division of the New York Mercantile Exchange, settled the official session up $1.60, or 0.1%, at $1,277.60 per ounce.
U.S. Secretary of State Mike Pompeo said the decision to end the waivers was “dramatically escalating our pressure campaign in a calibrated way that meets our national security objectives while maintaining well-supplied global oil markets”.
The Trump administration’s objective, Pompeo said, was to prompt Iran to renegotiate the international agreement halting its pursuit of nuclear weapons, halt its ballistic missile tests and end its support for terrorist groups, which U.S. officials say include Lebanon’s Hezbollah, the Palestinian Hamas, Houthi militias in Yemen and authoritarian regimes in Syria and Venezuela.
But with Iran being one of the Middle East's most hardened regimes, opposed to any meddling in its policy, it remains to be seen if any of the U.S. objectives would be met.
"We have years of experience in neutralizing efforts by enemies to strike blows against our country," Iran's semi-official Tasnim news agency quoted an oil ministry official as saying.
Escalation in U.S.-Iran tensions typically boost gold's safe-haven edge, precious metals analysts said.
“There is some risk aversion in the marketplace to start the trading week, as the U.S. is ratcheting up its economic sanctions on Iran,” Jim Wyckoff, senior analyst at Kitco Metals, said in a note.
The continued surge in oil prices would also work to gold's advantage. Global crude prices rose about 3% on Monday reacting to the Iran news, bringing this year's gains to as much as 45%.
Palladium fell after a two-day run-up to slide back under the $1,400 perch, though it remained the world's priciest traded metal. Spot palladium was down $36.05, or 2.5%, at $1,389.00 an ounce by 4:20 PM ET (20:20 GMT).
Trades in other Comex metals as of 3:40 PM ET (19:40 GMT):
Palladium futures down $26.90, or 2%, at $1,371.60 per ounce.
Platinum futures down $1.50, or 0.2%, at $902.20 per ounce.
Silver futures up 1 cent, or 0.1%, at $14.97 per ounce.
Copper futures down 2 cents, or 0.6%, at $2.90 per pound.