PRECIOUS-Gold jumps 1% to over 6-year high on Hong Kong, Argentina woes

Tue, 13th Aug 2019 11:01

* SPDR Gold holdings up 0.9% on Monday

* Silver touches over 1-1/2 year high

* U.S. 30-year bond yields slip to lowest since July 2016

* GRAPHIC-2019 asset returns: (Adds comments, updates prices)

By K. Sathya Narayanan

Aug 13 (Reuters) - Gold hit a more than six-year high on Tuesday as unrest in Hong Kong and a rout in the Argentine peso drove investors already spooked by the U.S.-China trade war into havens like bullion at the expense of riskier assets such as stocks.

Spot gold was up 1% at $1,526.61 per ounce as of 0916 GMT, having earlier touched its highest since April 2013. U.S. gold futures rose 1.4% to $1,538 an ounce.

"Bond yields and equities are down which are the main reason for gold to be higher. There is a bit of safe-haven (interest)," ABN Amro analyst Georgette Boele said. "People are nervous about Hong Kong again, and that's why Asian markets were down."

Share markets slid for a third day on Tuesday as investors were spooked by fears of a drawn-out global trade war, the Hong Kong protests and a crash in the peso.

In Hong Kong, pro-democracy protesters on Monday managed to shut down the city's airport, the world's busiest air cargo hub.

Elsewhere, Argentina's peso collapsed on Monday, losing roughly 15% of its value against dollar after crumbling to an all-time low.

Fears of a possible return to interventionist policies of the previous government have gripped the Argentine market since market-friendly President Mauricio Macri lost a primary election by a bigger-than-expected margin.

Bullion, along with the Japanese yen and U.S. Treasuries, is seen as a relatively safe investment in times of political and financial uncertainty.

The yen rose to a seven-month high against the dollar in the previous session, while U.S. 30-year bond yields extended Monday's losses to slip to their lowest since July 2016.

Analysts said negative debt yields around the globe were further supporting bullion. Non-interest bearing gold tends to benefit when yields on other assets are low.

Market focus is now on the U.S. Federal Reserve's annual symposium next week for clues on the future trajectory of interest rates. Traders see a 66% chance of a 25 basis-point rate cut by the U.S. central bank this September.

On the technical front, "a solid breakout and daily close above the $1525 level is likely to inject gold bulls with enough inspiration to challenge $1,550," FXTM analyst Lukman Otunuga said in a note.

Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, jumped 0.9% to 847.77 tonnes on Monday.

Among other precious metals, silver climbed 2.4% to $17.46 per ounce, its highest since January 2018. Platinum rose 1.4% to $864.38, while palladium gained 0.8% to $1,438.70 an ounce.

(Reporting by K. Sathya Narayanan in Bengaluru; Editing by Jan Harvey)

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