Gold hits new 3-month high on global economy concerns
Gold hit three-month highs on Monday, extending its biggest weekly rise since July 2013 as sliding stock markets, global growth uncertainty and a softer dollar prompted investors to seek safety in hard assets.
Spot gold reached a peak of $1,176.90, its strongest since Oct. 28, and was at $1,176.66 an ounce at 1104 GMT, up 0.3 percent.
The metal climbed 5 percent last week and has risen more than 10 percent since the start of 2016, reversing last year’s 10.4 percent loss.
The pan-European FTSEurofirst 300 was down 2.5 percent at 1,251.09 points, hitting its lowest since October 2014 on worries about economic growth.
“There’s certainly continued elevated volatility coming from oil prices, weaker equities,” said ETF Securities analyst Martin Arnold. “We think there is more upside. The next big level is $1,200, but it may take a while to test it.”
The dollar eased as markets reverted to the idea that the U.S. Federal Reserve may not raise interest rates as many times as had previously been expected.
Lower rates cut the opportunity cost of holding gold, which earns no yield but costs to store and insure.
The metal slid on Friday after the monthly U.S. jobs report suggested growth could be strong enough for higher U.S. rates, but quickly recovered.
Even if the Fed does raise rates further, it may not be by as much as the four rate hikes that financial markets had been pricing in a few weeks ago.
U.S. gold for April delivery was up 1.29 percent at $1,172.7 an ounce.
Hedge funds and money managers boosted their bullish bet in COMEX gold to a three-month high in the week to Feb. 2, U.S. Commodity Futures Trading Commission data showed on Friday.
“The recent CFTC data suggests speculators continue to trim short positions and bulls are also returning to the market,” ANZ said in a note. “The uncertainty around the Fed tightening cycle is likely to support gold prices in coming weeks.”
Positive sentiment was also boosted by SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, which said its holdings rose 0.7 percent to 698.46 tonnes on Friday.
The week-long Lunar New Year holiday in leading gold consumer China and other Asian countries starting on Monday means support from the physical market may be lacking, however.
Across other metals, platinum which tracked gold higher last week, slipped by 0.6 percent to $902.25 and palladium fell 1 percent to $495.50 an ounce.
Silver was down 0.2 percent at $14.94 an ounce.
Source: REUTERS
