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Gold jumped more than 1 per cent on Friday, surpassing the key $1,350 level for the first time since April last year, as a spur of weak economic data from both China and the US, and political concerns in West Asia raised safe-haven demand.
Spot gold climbed 1.01 per cent to $1,355.49 per ounce as of 0749 GMT, after hitting its highest level since April 11, 2018 at $1,358.04 earlier in the session.
Bullion has risen 1.1 per cent so far this week, keeping the yellow metal on track for its fourth consecutive weekly gain. US gold futures jumped 1.2 per cent to $1,359.50 an ounce.
“With geopolitical risk premium ratcheting higher on the back of West Asia tensions and an autonomy protest in Hong Kong, gold represents dependable insurance against those mounting geopolitical risks,” said Stephen Innes, managing partner at SPI Asset Management.
On Thursday, Washington blamed Iran for attacks on two oil tankers in the Gulf of Oman, raising concerns about a new US-Iranian confrontation.
Scuffles broke out between demonstrators and police in Hong Kong on Thursday as hundreds of people kept up a protest against a planned extradition law with mainland China.
Meanwhile, China's industrial output growth slowed to a more than 17-year low of 5 per cent in May, the latest sign of weakening demand in the world's second-largest economy as the US ramps up trade pressure.
“When the markets start waxing bearish economic data, it's the global recession they are concerned about, triggered by escalation of trade war,” Innes said.
“If we have the world's second-largest economy struggling, arguably we also have the US struggling, this is bad and we know we are one step away from recession.”
The impact of the long-drawn trade war was also evident on the US labour market, which saw an unexpected rise in the number of Americans filing applications for unemployment over the last week.
Recent economic readings out of the US have also boosted expectations of a rate cut by the US Federal Reserve, pulling short-dated US Treasury yields lower on Thursday ahead of the central bank's meeting next week.
“Gold traded higher as its appeal as an alternative investment in times of uncertainty. The yellow metal has risen as the probabilities of a summer interest rate cut by the Fed have increased,” Alfonso Esparza, a senior market analyst at OANDA, said in a note.
Among other precious metals, silver gained 1 per cent to $15.04, its highest in a week. Platinum rose 0.7 per cent to $813.08. Palladium climbed 0.4 per cent to $1,450.85 after hitting its highest since April 29 at $1,453.30 earlier in the session.
The auto-catalyst metal has gained 7 per cent so far this week and is set to post its best week since the week ended September 21, 2018.
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