Gold hits multimonth high as falling equities cement growth fears
Fears about a slowing global economy have sent safe-haven investors to the precious metal
Bengaluru — Gold touched its highest level in more than six months on Wednesday as sagging equities compounded concerns over weakening global markets, prompting safe-haven flows into the precious metal.
Spot gold was up 0.4% at $1,287.31 an ounce by 11.13 GMT, having earlier touched its highest since June 15 at $1,288.66.
US gold futures rose 0.6% to $1,289.40.
“We are seeing a very risk-averse market right now,” said Craig Erlam, senior market analyst at Oanda.
Global shares began 2019 on a downbeat note while oil prices and bond yields slid and the Japanese yen strengthened as data from far and wide exacerbated concern over the potential for a global economic slowdown.
Economic and geopolitical concerns mean it is only a matter of time before gold shoots up, said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.
Markets are also awaiting views from Federal Reserve chair Jerome Powell on the US economic outlook and hints about interest rates in 2019 when he participates in a joint discussion on Friday with former Fed heads Janet Yellen and Ben Bernanke.
Further pointers are expected this week from a closely watched survey on US manufacturing, due on Thursday, followed by the December payrolls report on Friday.
“People are also expecting a softer dollar in 2019,” Erlam said, adding that gold prices could also be supported by a changing outlook for interest rates.
There are expectations that a three-year rate-hiking cycle in the US has come to a close, which would be beneficial for non-yielding bullion.
The US Treasury market fell earlier in the day on assumptions that the Fed will call a halt to its rate increases.
Among other precious metals, palladium was steady at $1,263.70 an ounce.
Silver rose 0.2% to $15.48, having touched its highest level since August 3 at $15.52, while platinum fell 0.4% to $788.74.