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Gold prices ease after earlier spike above $1,400 per ounce to prices not seen in nearly 6 years

Melted gold flows out of a smelter
Arnd Wiegmann | Reuters

Gold prices hit their highest levels in nearly six years on Friday, buoyed by expectations of easier monetary policy in the U.S.

Gold futures traded as high as $1,415.40 per ounce before paring those gains. Futures are currently trading at $1,401.6.

Earlier this week, the Federal Reserve opened the door for a possible rate cut in the future, sending the yield on the benchmark 10-year Treasury note below 2% — a key psychological level — for the first time since November 2016.

The U.S. dollar index, which tracks the greenback against a basket of currencies, was at 96.687 after touching levels above 97.6 earlier in the week.

"The negative correlation between the gold price and US Dollar has driven investors into gold ahead of any weakness in the US Dollar," David Lennox, resource analyst at Fat Prophets, told CNBC in an email.

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"As rates fall the US dollar will likely weaken as well," he said, adding that the weakness in the greenback "could be amplified" by any return to easing policies. Furthermore, the heightened geopolitical landscape has given the safe haven premium in gold price a boost, he added.

With gold having already hit the firm's end year target range of between $1,375 and $1,400 per ounce, Lennox said there "will be a pullback."

"Gold prices have recovered from their lows and we think this rise could be sustainable," strategists at Singapore's DBS Group Research wrote in a note. "Rising political tensions, lower bond yields and (a U.S. dollar) on the verge of reversing should make the rest of 2019 very interesting for the metal."

The Fed's move followed other major central banks pointing to further monetary stimulus if needed. European Central Bank President Mario Draghi said earlier this week that "additional stimulus will be required " if the economic situation worsens in the coming months.

Bank of Japan Governor Haruhiko Kuroda also indicated on Thursday the central bank would "consider expanding stimulus without hesitation " — should the economy lose momentum toward achieving the ever elusive 2% inflation target.

Gold also got a bid as tensions between the U.S. and Iran increased after Iran shot down a U.S. drone on Thursday. The New York Times reported late Thursday that Trump had approved military strikes on several Iranian targets before abruptly pulling back.

— Correction: This article was updated to reflect that spot gold prices crossed the $1,400 mark for the first time since September 2013, and that earlier in the week European Central President Mario Draghi said "additional stimulus will be required" if the economic situation worsens in the coming months.

—CNBC's Fred Imbert and Maggie Fitzgerald contributed to this report.