Gold rises and holds near six-month highs on volatile shares
SPDR Gold holdings see their best one-day surge in more than two years
Bengaluru — Gold rose on Thursday, holding near six-month highs hit in the previous session, supported by a weaker dollar and buyers hedging against volatile stock markets.
Spot gold rose 0.4% at $1,271.65 an ounce as of 12.15pm GMT, after hitting its highest since June 19 at $1,279.06 in the previous session. US gold futures rose 0.1% to $1,274 an ounce.
“The risk-averse sentiment is the most dominant force today. Investors are busy profit-taking in equities, which is benefiting gold,” said Naeem Aslam, chief market analyst at Think Markets UK.
World stocks bounced off a near two-year low on Thursday following a dramatic Wall Street surge on Wednesday. However, the rally fizzled somewhat in Europe where shares erased most of their early gains.
“There has been an extensive surge in the gold exchange traded fund (ETF) holdings and there is absolutely no shortage of momentum there. Investors are just preparing themselves by buying gold as there are several uncertainties heading into 2019,” Aslam said.
Investor confidence in bullion was reflected in a surge in the holdings of SPDR Gold, the largest gold ETF. SPDR holdings rose 2.1% on Wednesday, their best one-day percentage gain since July 2016. SPDR holdings are at their highest level since August, and have risen about 8% since touching more than two-and-a-half-year lows in October.
Meanwhile, sterling-denominated gold hit its highest since September 2017 on Wednesday at £1,009.41 and was up 0.4% at £1,006.73 on Thursday. “Clearly, investors are hedging their bets ahead of the [Brexit] vote in January,” Aslam said.
European commissioner Günther Oettinger said on Thursday that there is still a chance that Britain’s parliament will vote in favour of the Brexit agreement in January and that there is no public support for a disorderly Brexit or another referendum.
“The outlook for gold is much brighter now as we broke the 200-day moving average last week,” said ABN AMRO analyst Georgette Boele, adding that a weaker dollar was also helping gold.
The dollar index, a gauge of its value compared to six major peers, slipped 0.3% on Wednesday, making gold cheaper for holders of other currencies.
A partial US government shutdown was widely expected to continue after Congress reconvenes on Thursday, with lawmakers split over US President Donald Trump’s demand for $5bn in taxpayer funding for a proposed Mexican border wall.
Among other metals, silver was up 0.3% to $15.08 an ounce, after hitting its highest level since mid-August at $15.17 on Wednesday. Platinum fell 0.2% to $793.30 an ounce, while palladium rose 0.1% to $1,255.74.