Gold hits new 3-month high on global economy concerns

Tuesday, 9 February 2016 00:12 - - {{hitsCtrl.values.hits}}

Reuters: Gold hit three-month highs on Monday, extending its biggest weekly rise since July 2013 as sliding stock markets, global growth uncertainty and a softer dollar prompted investors to seek safety in hard assets.

Spot gold reached a peak of $1,176.90, its strongest since 28 October, and was at $1,176.66 an ounce at 1104 GMT, up 0.3%.

The metal climbed 5% last week and has risen more than 10% since the start of 2016, reversing last year’s 10.4% loss.

The pan-European FTSEurofirst 300 was down 2.5% at 1,251.09 points, 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 $1,200, but it may take a while to test it.”

The dollar eased as markets reverted to the idea that the U.S. 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.

The metal slid on Friday after the monthly U.S. jobs report suggested growth could be strong enough for higher U.S. 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.

U.S. gold for April delivery was up 1.29% at $1,172.7 an ounce.