US-Iran tension: Gold rises to near six-year high on dollar weakness

Gold prices rose to their highest level in nearly six-years on Tuesday as the dollar sat near multi-month lows and the announcement of fresh US sanctions on Iran boosted interest in the safe-haven metal. Spot gold was up 0.4% at $1,424.35 per ounce as of 0100 GMT, after hitting its highest level since August 28, 2013 at $1,428.54. US gold futures rose 0.8% to $1,429.40 per ounce.

US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions on Monday, taking a dramatic, unprecedented step to increase pressure on Iran after Tehran`s downing of an unmanned American drone.

The dollar dropped to a three-month low against a basket of currencies on bets the U.S. Federal Reserve may lower interest rates more than once this year. 

US Treasury yields fell on Monday, holding just above almost three-year lows, ahead of trade talks between the U.S. and China later this week.

Trump again criticized the Federal Reserve on Monday for not cutting interest rates, keeping up his pressure on the central bank to change its policies.

Investors are focused on whether President Trump and Chinese President Xi Jinping can de-escalate the trade war between the two countries when they meet at the G20 summit in Japan.

Trump is slated to meet one-on-one with at least eight world leaders on the sidelines of the G20 summit in Osaka, Japan, later this week, a senior U.S. administration official said on Monday.

Asian stocks were left adrift on Tuesday as expectations of more dovish talk from the Federal Reserve pushed down Treasury yields and the dollar. 

Holdings of SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, rose 0.37% to 801.96 tonnes on Monday from 799.03 tonnes on Friday.