BENGALURU, July 03 (Reuters): Gold prices rose on Wednesday on worries over global growth and as latest nominations to major central banks reinforced expectations of monetary policy easing.
Spot gold was up 0.5 per cent at $1,425.70 per ounce, as of 1016 GMT, having earlier hit its highest since June 25, at $1,435.99.
US gold futures rose 1.5 per cent to $1,429.30.
European Union (EU) leaders' nomination of IMF chief Christine Lagarde as Mario Draghi's replacement at the helm of the European Central Bank reinforced expectations of monetary policy easing in the bloc.
Traders greeted the decision by kicking German 10-year Bund yields to record lows.
"Yields falling further on eurozone on (the nomination of Lagarde) is positive for gold. With the pledge to continue loose monetary policy and further easing rates, the opportunity cost of holding gold is falling and that's giving support to gold," said Quantitative Commodity Research analyst Peter Fertig.
Meanwhile, US President Donald Trump announced on Tuesday the names of two nominees to fill vacant posts on the Federal Reserve Board. Trump says he wants lower rates to better compete with China and has accused Jerome Powell, whom he appointed to lead the central bank in early 2018, of doing a "bad job."
"Trump's nominees, if appointed and approved, will support his view (for rate cuts.) If you have a Fed that is no longer independent and strong to resist the siren calls of the president, what better arguments will you get for buying gold," Fertig said.
The dollar also struggled for traction, while US bond yields fell to their lowest levels since late 2016, all boosting gold's appeal.
US Treasury yields were also pressured by a drop in British bond yields after Bank of England Governor Mark Carney flagged uncertainties over Brexit and trade conflicts that prompted speculation the central bank may lower interest rates.
Gold hit a six-year high last week at $1,438.63 an ounce, driven by a dovish outlook from major central banks and an escalation of tensions between the United States and Iran.
"Downbeat economic data and race to the bottom in bond yields are prompting safe haven inflows into gold," said Societe Generale analyst Robin Bhar.
