2019.07.1906:41:00UTC+00Gold Climbs Above $1,450 On Fed Hopes, Iran Tensions

Gold prices traded mixed on Friday after surpassing the key $1,450 level for the first time since May 2013 earlier in the day, thanks to Fed rate cut hopes and growing U.S.-Iran tensions.

Spot gold slid half a percent to $1,438.62 an ounce after hitting as high as $1,453.01 in early trade. U.S. gold futures were up 0.8 percent at $1,440.15 an ounce.

Traders piled on bets for a 50 basis points rate cut by the U.S. Federal Reserve at its July 30-31 policy meeting after New York Federal Reserve President John Williams endorsed a near-term interest rate cut at the first sign of economic distress to counter risks from trade disputes and sluggish inflation.

The U.S. dollar recovered slightly after having fallen to a near two-week low on dovish Fed comments.

Investors are also taking stock of developments in the Middle East after the U.S. Navy shot down an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows.

President Donald Trump told reporters the USS Boxer took defensive action after the drone closed to within 1,000 yards of the amphibious assault ship and ignored multiple calls to stand down.

The downing of the Iranian drone comes a month after the Islamic Revolutionary Guards Corps shot down an unmanned U.S. surveillance drone.