Metals Stocks: Gold looks for direction after hitting 6-year high

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Gold futures hovered near unchanged Monday, in consolidation mode after hitting a six-year high last week but underpinned by rising geopolitical worries after Iran seized a British-flagged tanker and as investors look for major central banks to ease policy.

Gold for August delivery on Comex GCQ19, +0.04%  was up 10 cents, or less than 0.1%, at $1,426.80 an ounce, while September silver SIU19, +0.99%  rose 21.5 cents, or 1.3%, to $16.41 an ounce.

“The price of gold has picked up strongly since late May as concerns about weak global growth, and rising geopolitical tensions in the Middle East, encouraged demand for safe havens,” wrote analysts at Capital Economics, in a note. “In addition, investment demand has been spurred by an explosion in negative yielding debt and there has been stellar demand from central banks.”

But the analysts expect gold prices to stagnate over the remainder of the year. They argue that investors will need to factor in shallower rate cuts than currently anticipated by the Federal Reserve and they’ve also penciled in weaker physical demand from Asia in response to an increase in India’s duty on gold imports.

Gold last week climbed above $1,450 an ounce for the first time in six years as expectations grew for the Federal Reserve to cut interest rates by as much as a half point at its July 30-31 meeting. But gold subsequently pulled back after the New York Fed said bullishly interpreted remarks by its president, John Williams, weren’t meant as a commentary on policy actions at the July meeting.

Still, investors look for the Fed to cut rates by a quarter point next week, while the European Central Bank could signal this week its preparing to take additional easing measures in coming months.

Iranian forces on Friday captured a British-flagged oil tanker in the Persian Gulf. Oil futures rose early Monday.

In other metals trade, October platinum PLV19, +0.12%  rose 40 cents, or less than 0.1%, to $852.50 an ounce, while September palladium PAU19, -0.68%  was off $7.20, or 0.5%, at $1,501.10 an ounce.

September copper HGU19, -0.69%  was 2.2 cents lower at $2.7305 a pound, off 0.8%.