Gold lifts more than one per cent

05_Gold lifts more than one per cent

(Australian Associated Press)

Gold has risen one per cent, boosted by lower equities and weak US data, leaving the metal well placed to log its best monthly performance in four years as turmoil in wider markets increases its safe-haven appeal.

Spot gold rose 1.3 per cent to $US1,238.41 by 2.56 pm EST (0656 Tuesday AEDT) and was on track to finish February up 10.6 per cent, its strongest monthly performance since January 2012.

US gold futures for April delivery settled up 1.1 per cent at $US1,234.40 an ounce.

“This has started as a rocky year for global markets and while some countries are moving into negative rates, the outlook for US interest rates hikes is not as positive,” Natixis analyst Bernard Dahdah said.

Bullion has rallied about 16 per cent in 2016, rediscovering its role as a shelter for risk-averse investors in the face of tumbling equities and fears of a global economic slowdown.

Prices hit a one-year high of $US1,260.60 in February, further supported by the repricing of expectations for US interest rate rises.

“Coming into March, technical indicators look fairly solid and the ETF movements look quite supportive,” said Mitsubishi Corp strategist Jonathan Butler.

“On the macroeconomic side, however, next week we are going to have the ECB (European Central Bank) announcement of possible further quantitative easing, which is going to weigh on the euro against the dollar and all commodities should come under pressure again.”

US data showed contracts to buy previously owned US homes fell to their lowest level in a year in January

“It keeps the Fed on the path of accommodation,” said Bill O’Neill, co-founder of commodities investment firm Logic Advisors in New Jersey.

“The Fed is not going to hike rates in March and probably won’t hike rates more than once this year, and I could see them not hiking rates at all this year.”

Hedge funds and money managers raised their bullish stance in COMEX gold to a one-year high, data showed on Friday.

Assets in SPDR Gold Trust, the world’s top gold-backed exchange-traded fund, rose to 762.41 tonnes on Friday, the highest in about a year.

Gold prices on the Shanghai Gold Exchange were at a premium of about $US2 an ounce, indicating buying interest from top consumer China.

Physical demand in India, however, remained subdued last week, with the market falling to record discounts.

Among other precious metals, platinum rose 2.0 per cent to $US931.82 an ounce, while silver gained 1.4 per cent to $US14.88 and palladium climbed 2.2 per cent to $US491.

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