Gold bullion is displayed at Hatton Garden Metals precious metal dealers in London. File Picture: REUTERS/NEIL HALL
Gold bullion is displayed at Hatton Garden Metals precious metal dealers in London. File Picture: REUTERS/NEIL HALL

Bengaluru — Gold prices scaled a more than six-month peak on Thursday as fears of a global economic slowdown embellished safe-haven demand for bullion, with a weaker dollar adding further support.

Spot gold was up 0.3% at $1,288.49 an ounce at 1237 GMT, having touched its highest level since June 15 at $1,292.32.

US gold futures traded up 0.5% at $1,290.40.

“Fears of an economic slowdown are one source of the equity market volatility, thus contributing to the covering of short positions in the futures market and investors’ renewed interest in gold,” said Julius Baer analyst Carsten Menke.

European and Asian bourses were dealt a heavy blow as Apple announced its first revenue guidance contraction in 12 years.

The news from the technology giant also weighed on the dollar index, which slipped about 0.2%. Weakness in the currency reflects concerns over the US economy and a drastic shift in investor expectations for interest rate rises, with many now expecting an end to the US Federal Reserve’s rate-raising cycle.

A weaker dollar makes gold cheaper for holders of other currencies.

Markets will be looking for clues on US interest rates after Federal Reserve chair Jerome Powell meets former Fed chairs Janet Yellen and Ben Bernanke on Friday.

Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion.

The market is also awaiting a closely watched survey on US manufacturing due on Thursday, followed by a December payrolls report on Friday.

Meanwhile, businesses in Britain’s dominant services sectors reported the slowest sales growth in two years during the final three months of 2018, indicating a slowing economy ahead of Brexit.

Gold also hit multimonth highs in euro and sterling terms. Gold denominated in sterling peaked at £1,031.89 during the day, its highest since September 8 2017, while it peaked at €1,137.47, the highest since June 9 2017.

“Volatile global markets always add to the charm of buying gold,” said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services in New Delhi.

“There is also a major tailwind for gold early in the year, due to buying ahead of Lunar New Year holidays in much of the world.”

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose to 795.31 tons, their highest since early August, indicating investor appetite for the precious metal.

Among other precious metals, palladium gained 0.3% to $1,258.40 an ounce while silver was up 0.3% at $15.56 and platinum shed 0.4% to $791.30. 

Reuters