Gold hits $1,400 an ounce and oil nudges higher on Iran uncertainty

Gold rose above $1,400 an ounce yesterday to hit its highest level for almost six years as a weaker dollar, economic concerns and geopolitical tensions sparked a flight to safety.

Demand has jumped since the Federal Reserve indicated on Wednesday that it was likely to cut interest rates soon - for the first time in a decade. The comments sent the dollar lower, making it cheaper to buy the precious metal.

Gold prices have surged about 10pc this month and rose as high as $1,412 an ounce yesterday - its highest since September 2013 - before falling back to about $1,394.

“There is a perfect mix of ingredients for gold’s rush to the top – a weak macroeconomic environment, low bond yields, soft dollar and rising geopolitical tensions,” said Howie Lee, an economist at OCBC Bank.

Oil prices rose 1pc to just over $65 a barrel despite Donald Trump saying he aborted a military strike on Iran because it would have been a disproportionate response to the shooting down of an unmanned US surveillance drone by Tehran. 

The increase, which followed a 5pc jump on Thursday, reflected fears of a disruption to flows in the Middle East, which provides more than a fifth of the world’s crude.

“A lot of the oil produced in the world comes from very troubled areas, and occasionally we get reminders of that,” said Gene McGillian at Tradition Energy in Stamford, Connecticut.