LONDON – Gold rallied more than 1 percent on Monday, buoyed by rising tensions in the Middle East and a sharp drop in stocks and the dollar following weak Chinese data that fuelled concerns over global growth.
Platinum group metals, which as largely industrial commodities are more exposed than gold to economic weakness, dropped sharply after Chinese manufacturing surveys undermined any hopes for a recovery in the sector.
Spot gold was up 1.1 percent at $1,071.84 an ounce at 1229 GMT, while U.S. gold futures for February delivery were up $11.30 an ounce at $1,071.50.
Gold rose after Saudi Arabia cut diplomatic ties with Iran after Iranian protesters stormed its embassy in Tehran, following Riyadh’s execution of a prominent Shi’ite cleric on Saturday. That lifted oil prices as much as 3 percent.
Though oil retraced those gains after the Chinese data prompted growth concerns, gold benefited further from weakness in stocks and the dollar.
“The whole Saudi-Iran situation is obviously a worry, in the sense of two big regional powers seemingly at loggerheads, so there could be a bit of a safe haven bid,” Mitsubishi analyst Jonathan Butler said.
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