Investing.com – Gold prices traded sharply higher on Monday as political uncertainty in the Middle East fuelled safe-haven demand.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose by $11.72, or 0.93%, to $1280.96 a troy ounce.
Gold prices made a strong start to the week as investors piled into the precious metal amid growing political uncertainty in the Middle East after Saudi Crown Prince Mohammed bin Salman led an anti-corruption drive which resulted in a series of arrests of prominent Saudi Arabians.
“We have political uncertainty, risk of political instability in this major oil producing country [Saudi Arabia] and also unforeseen implications for the entire region,” Commerzbank analyst Carsten Fritsch said.
A retreat in the dollar, meanwhile, also underpinned a move higher in gold prices as investor concerns grew over the leadership of the Federal Reserve after the Federal Reserve Bank of New York confirmed that William Dudley was preparing to retire earlier than planned.
Gold prices are sensitive to moves lower in the U.S. dollar – A lower dollar makes gold cheaper for holders of foreign currency, thus, increases demand.
Despite data showing market participants increased their bullish bets on the precious metal last week, traders expected gold prices to remain range bound with biased toward the downside.
Net bullish bets on gold rose to 193,100, from 191,400 the previous week according to a report from the Commodity Futures Trading Commission (CFTC) on Friday.
“Speculative financial investors are still withdrawing from gold,” Commerzbank said on Monday.
The uptick in natural gas prices comes as Commodity Weather Group said it expected below-normal temperatures in U.S. Pacific Northwest, Midwest and parts of Northeast between Nov. 6-10.