DUBAI: Gold, which breached its elusive $1,350 an ounce mark, is finally claiming its rightful status as a safe haven instrument ahead of the Federal Reserve meeting later in the week.

International spot gold prices rallied to $1,358.04 (Dh4,987) per ounce, the highest level in 14 months as traders anticipated two rate cuts in 2019.

Softer than expected data from the United States, the world’s largest economy, are fanning expectations of two rate cuts this year, which may potentially weaken the dollar and aid gold prices. The US Federal Reserve meets on June 18-19.

“Gold should at minimum be on everyone’s radar if not in everyone portfolio. After the break of the psychological $1,350, gold is reclaiming its status as a must-have asset in everyone’s investment portfolio,” said Stephen Innes, managing partner at Vanguard Markets said.

“While the prospect of lower US rates and dovish Fed expectations remain supportive, gold appeal goes well beyond that and is moving higher on own its accord as a safe and inexpensive hedge against the abundance of tail risks rapidly wagging,” Innes added.

Gold has been an underperformer among other financial assets. Gold gained only 4 per cent since January 1 before the latest rally despite brewing trade war tensions. This compares with more than 10 per cent jump in the Dow Jones Industrial Average index.

But Innes expects more buying into the yellow metal.

“Given the lightning pace of Friday’s move, we suspect gold remains under-owned and will be super reactive to geopolitical headline risk and global recessionary waxing. Any negative will trigger another massive wave of buying. So, buckle up we could be in for nervy times,” Innes said.

In the equity markets, the Dow Jones Industrial Average closed almost flat at 26,089.61, down 0.07 per cent. The index had gained 1.26 per cent in the past one month.

“Undoubtedly, next week’s main event is likely to be the FOMC rate decision on Wednesday. While rate cut expectations have risen sharply of late, no one is seriously expecting the Fed to loosen its belt at this meeting, despite the weakness in core consumer prices in May,” Fawad Razaqzada, Technical Analyst with said. The S&P 500 index closed 0.18 per cent lower at 2,886.98 on Friday. The index has gained nearly 1 per cent in the last one month.

“Equities have been on a good run the last couple of weeks, ever since the Fed assured investors that it wasn’t just going to sit back and watch the economy slow before its eyes. The rally has slowed paused this week, with the latest heightened geopolitical risks naturally weighing on risk appetite, albeit without dragging too heavily on stocks,” Craig Erlam, Senior Market Analyst, UK & EMEA at OANDA said.