Gold hits six-year peak on softer dollar, US-Iran friction

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Gold prices climbed more than 1% on June 25to their highest in six years as the dollar weakened on prospects of monetary easing by the Federal Reserve, while simmering US-Iran tensions drove investors towards the safe-haven bullion.

Spot gold was up 0.4% at $1,403.88 per ounce as of 0701 GMT, heading for a fifth straight session of gains.

With the on-going Dollars weakness and pessimistic trade/political plays providing background music to the yellow metal's surge to the multi-year top, the Gold prices are now taking the bids near $1426 during early Tuesday.

The metal surged to the highest level in six years as fresh USA sanctions on Iran added to uncertainty in global markets, with semi-official Iranian Students News Agency reporting that the diplomatic path with Washington is closed "forever", citing foreign ministry spokesman Abbas Mousavi.

US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions on Monday to increase pressure on Iran after Tehran's downing of an unmanned American drone.

"Gold surpassed some fairly good support levels, so (I) do feel like prices will broadly hold above the $1,400 level". Another key event on traders' watchlist is Federal Reserve Chairman Jerome Powell's speech in NY later Tuesday, which will touch on monetary policy.

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"We remain cautiously optimistic on gold as a weaker dollar should provide the precious metal with a robust tailwind for now", INTL FCStone analyst Edward Meir said in a note.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 4.57% on Friday from a day earlier, in their biggest one-day percentage gain since September 2008.

Meanwhile, investors looked to whether Trump and Chinese President Xi Jinping would at least call a truce in their trade war when they are expected to meet at the G20 summit in Osaka later this week.

Gold and bitcoin - both seen as safe haven assets - have been rallying in response to the rising tensions between the two nations. The investment bank said "the sustained decline in rates is a key factor" in gold's bull run, as well as "uncertainty around growth and trade risks".

Among other precious metals, silver edged 0.1% higher to $15.37 per ounce and platinum was up 0.9% at $812.63.

Palladium rose 1.1% to $1,516.70 an ounce.

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