July 19 (Reuters) - Gold prices rose to their highest in
more than six years on Friday, supported by fresh tensions in
the Middle East and comments from a top Federal Reserve official
that cemented expectations of an interest rate cut.
FUNDAMENTALS
* Spot gold XAU= hit $1,452.60 an ounce in early trade,
its highest since May 2013, before easing to be down 0.2% at
$1,442.71 as of 0117 GMT.
* The metal has gained 1.8% so far this week, on track for a
second consecutive weekly gain.
* U.S. gold futures GCv1 jumped 1% to $1,441.90 an ounce.
* New York Fed President John Williams said on Thursday that
policymakers need to add stimulus early to deal with too-low
inflation when interest rates are near zero and cannot wait for
economic disaster to unfold. * The comments from Williams made it a virtual certainty the
Fed would opt to cut interest rates by 25 basis points (bps) at
its July 30-31 policy meeting and also fuelled expectations of
an even deeper 50 bp reduction.
* The dollar index .DXY was relatively unchanged against a
basket of major currencies on Friday after falling to a near
two-week low in the previous session as Williams' remarks
increased bets the central bank would lower interest rates at
month-end. USD
* Meanwhile, the United States said on Thursday that a U.S.
Navy ship had "destroyed" an Iranian drone in the Strait of
Hormuz after the aircraft threatened the vessel, but Iran said
it had no information about losing a drone. * U.S. and Chinese officials were scheduled to have a phone
call on trade later on Thursday, U.S. Treasury Secretary Steven
Mnuchin said in an interview on the sidelines of the G7 meeting
in Chantilly, France, potentially opening the door for direct
talks to resume. * SPDR Gold Trust GLD , the world's largest gold-backed
exchange-traded fund, said its holdings rose 1.42 percent to
814.62 tonnes on Thursday from 803.18 tonnes on
Wednesday. GOL/ETF
DATA AHEAD (GMT)
* 0600 Germany Producer Prices MM YY June
* 1400 US U Mich Sentiment Prelim July