Gold sparkles at 4 month high on safe haven status

Date

2/11/2016 5:13:18 AM

(MENAFN- Khaleej Times)

Gold hit its highest level since mid-October on Monday extending its biggest weekly rise since July 2013 as sliding stock markets and global growth uncertainty prompted investors to seek safety in hard assets.

Spot gold reached a peak of $1182.60 its strongest since October 16 and was at $1178.76 an ounce at 1326 GMT up 0.5 per cent.

The metal climbed five per cent last week and has risen more than 10 per cent since the start of 2016 reversing last year's 10.4 per cent loss.

The pan-European FTSEurofirst 300 was down 2.7 per cent 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 $1200 but it may take a while to test it."

The dollar eased as markets reverted to the idea that the US 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.

Monthly US jobs report

The metal slid on Friday after the monthly US jobs report suggested growth could be strong enough for higher US 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. US gold for April delivery was up 1.29 per cent at $1172.7 an ounce.

Hedge funds and money managers boosted their bullish bet in Comex gold to a three-month high in the week to February 2 US 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 (ETF) which said its holdings rose 0.7 per cent 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 was up 0.3 per cent to $909.89 while palladium fell 1.3 per cent to $494.65 an ounce.

Silver was up 0.3 per cent at $15.01 an ounce.

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