Gold prices reach six-week high ahead of Britain's General Election

 
Courtney Goldsmith
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Gold bars are displayed at Shinhan Bank
Gold prices have jumped ahead of the General Election Thursday (Source: Getty)

Gold climbed to six-week highs this morning as risk-averse investors flocked to the safe haven asset.

The yellow metal was up 0.75 per cent to $1,292.30 per ounce at the time of publishing ahead of a week packed with major events, including the UK's General Election.

"It’s quite normal to see this kind of behaviour when the latter part of the week is as busy as it is," said Craig Erlam, senior market analyst at Oanda.

Erlam said the UK's election is a "standout" event as the outcome will shape Brexit negotiations over the next couple of years.

"The Conservative lead over Labour has collapsed, if the polls are to be believed, and it seems that the only thing that Theresa May currently has on her side now is time, with Labour still having a lot to do and only two days in which to achieve it," Erlam said.

Other events weighing on investors' minds include the European Central Bank's latest monetary policy decision on Thursday and the US Federal Reserve's similar decision next Wednesday.

"Once these events pass, we may have a little more clarity and therefore see a little less caution in the markets."

Henry Croft, research analyst at Accendo Markets, said bullish traders will be looking for the metal to return to 2017 highs of $1,295 while bears will hope a recovery in the US dollar will cap gains.

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Meanwhile, a report today from online gold market BullionVault said gold sentiment among private investors jumped to a new 2017 high in May, rising at the fastest pace in over two years.

"Equities and other risk assets remain the focus for most private investors, but sustainable trends in any market start quietly, and buying gold as investment insurance is a long way from a crowded trade right now," said Adrian Ash, research director at BullionVault.

The number of BullionVault users starting or adding to their gold holdings last month rose more than 28 per cent from April, reaching its highest since last December, while the number of sellers fell by a third.

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