(MENAFN- ProactiveInvestors) Gold had its best week in six months as equity markets slipped on falling oil prices while the dollar had a rare wobble.
After rising 3.5% in the first two days of this week the precious metal has now bounced back 7% since the low of US$1140 seen in November.
Spot gold was trading at US$1220 – compared to Monday’s opening price of US$1191.
The volatility of stock markets has helped even though low oil prices should cap inflation even further not good for the metal’s traditional role as a hedge to rising prices.
Falling oil has also put the timing of US interest rate rises firmly back on the agenda as effectively it amounts to a huge tax cut for the car-driving consumer.
Set against that though are the problems in Europe and Japan where with the UK an exception economic recovery remains as elusive as ever.
One of the drivers behind gold’s rise this week was the prospect of more eurozone woe after there was a shock presidential election call in Greece.
Fears that this may result in victory for the anti-austerity Syriza party and spark a showdown with Europe on Greece’s economic problems hit share prices globally and lifted safe haven demand for gold.
Gold–backed exchange traded funds reflected the market’s nervousness with the largest ETF SPDR Trust now seeing an inflow of almost 1% since November’s low after another uptick this week.
ETF selling was a major feature behind last year’s 28% fall in the gold price but it been nothing like on the same scale in 2014.
Overall gold now seems set for a year of consolidation though compared to most other commodities this means the metal has fared pretty well.
Year to date gold was more or less where it started 2014 as trading got underway Friday.
That compares to a 10% decline in platinum 14% in silver and a 40% slide in the oil price and 47% drop in iron ore.
Other metals have done better notably nickel (up 18%) aluminium and zinc but few of these had such gloomy predictions as gold at the start of the year.
Broker SP Angel said that the economic environment is surprisingly good for miners not focused on iron ore and coal.
“Gold miners with any sense of grip on their costs should be raising their margins” it added.
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