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Gold rallies to 3-month high on safe haven buying


COMEX gold trades near $1235/oz after a 1% gain Tuesday when it hit a high of $1243/oz, the highest level since July 17.

Gold hit three month high on safe haven buying and choppiness in US dollar. US DJIA index fell 0.5% yesterday marking its second consecutive decline. Weighing on market sentiment are geopolitical tensions relating to Saudi Arabia, mixed US corporate earnings results and warnings by some companies about higher costs due to import tariffs, slowdown in Chinese economy, Brexit uncertainty and Italy's budget crisis.

President Trump on Tuesday condemned Saudi Arabia's account of the killing of the journalist Jamal Khashoggi as "the worst cover-up ever." US and global leaders are considering punitive action against Saudi however US President seems apprehensive to punish Riyadh, a strong ally

In an unprecedented move, the European Commission has told Italy to revise its budget and submit a new draft in three weeks. The Commission said the first draft represented a "particularly serious non-compliance" with its recommendations. Italian Prime Minister Giuseppe Conte said his government had no "Plan B" for its budget.

The US dollar index trades near 96 levels amid mixed cues. Supporting US currency is Fed's support for raising interest rate beyond neutral rate and concerns about European economies amid Brexit impasse and Italy budget crisis. However, weighing on US dollar is safe haven buying in Japanese Yen and US bonds.

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