June 25, 2019 / 3:35 PM / 25 days ago

GLOBAL MARKETS-Gold soars to 6-year high as trade, as Iran tensions mount

(Adds U.S. market open, byline, dateline; previous LONDON)

* Wagers on more dovish Fed talk keep yields, dollar down

* Gold extends gains as rates and dollar drop

By Herbert Lash

NEW YORK, June 25 (Reuters) - Gold soared to almost a six-year high on Tuesday on escalating U.S.-Iran tensions and U.S.-Sino trade anxiety, leading traders to pile into safe-haven government debt and to snap up the yen and Swiss franc at the expense of the dollar.

Gold has gained 10% in price so far this month, climbing above $1,400 an ounce for first time since August 2013 after briefly touching the psychological barrier on Monday.

The dollar, meanwhile, fell to a three-month low against the euro and dropped to its weakest against the Japanese yen since early January as the prospect of an interest rate cut by the Federal Reserve knocked demand for the U.S. currency.

The yen also benefited from concerns about tensions between the United States and Iran, which said U.S. sanctions permanently closed the path to diplomacy between the two countries.

MSCI’s gauge of global equity markets, most major European indexes and stocks on Wall Street slipped, with bank shares dipping ahead of speeches by at least five Fed policymakers later in the day, including Chair Jerome Powell.

Factors behind gold’s strength include slower global growth, “the tinder box of the Middle East with Iran and the G20, which may not bring the (trade) deal with China that everybody is expecting,” said George Gero, a managing director at RBC Wealth Management in New York.

Spot gold added 0.8% to $1,430.44 an ounce.

The dollar slid 0.34% to 106.94 yen after slipping to 106.78 yen during Asian trading, its weakest since Jan. 3.

Rate-sensitive bank stocks fell 0.87%, as yields on U.S. benchmark debt, the 10-year Treasury note, fell below the closely watched 2% level.

MSCI’s gauge of stocks across the globe shed 0.36%, while the pan-European STOXX 600 index lost 0.09%.

The Dow Jones Industrial Average fell 80.95 points, or 0.3%, to 26,646.59. The S&P 500 lost 13.39 points, or 0.45%, to 2,931.96 and the Nasdaq Composite dropped 63.23 points, or 0.79%, to 7,942.46.

Powell is expected to maintain a dovish posture after the U.S. central bank last week signaled it could cut rates as early as July to battle slowing growth at home and abroad.

“Powell is probably the main event today. If he repeats what he said last week I don’t think markets really move all that much,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.

Interest rate futures traders are pricing in a 62% chance of a 25 basis point cut in July and a 38% chance of a 50 basis point cut, according to the CME Group’s FedWatch Tool.

U.S. President Donald Trump is due to meet one-on-one with at least eight world leaders at the G20 summit in Osaka, Japan at the end of the week, including Chinese President Xi Jinping and Russian President Vladimir Putin.

Chinese investors seemed none too hopeful as Shanghai blue chips slipped 1%. Japan’s Nikkei dropped 0.4%.

Oil prices ticked up in anticipation of data due later that would show U.S. crude stocks fell, erasing earlier declines linked to concerns over waning demand

Benchmark Brent crude futures rose 27 cents to $65.13.

U.S. crude futures rose 8 cents to $57.98 a barrel.

Reporting by Herbert Lash; Editing by Steve Orlofsky

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