K. Sathya Narayanan
Gold prices scaled a more than six-month peak yesterday as worries about a global economic slowdown and volatility in equities boosted safe-haven buying, while a weaker dollar offered support.
Spot gold touched its highest since June 15 at US$1 292.01 per ounce, and was up 0.6% at US$1 291.81 at 0652 GMT.
US gold futures were up 0.7% at US$1 292.90 per ounce.
“The weaker dollar lent some support for gold. People are more interested in gold as the stock markets are under pressure and are looking at gold as a safe haven,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
The US dollar index fell over 0.3%. The Japanese yen, also a preferred asset during times of economic volatility, surged versus the US currency yesterday. A softer US dollar makes the greenback denominated bullion cheaper for investors holding other currencies.
Adding to investor concerns, a meeting between US congressional leaders and president Donald Trump on Wednesday saw no sign of an agreement to end a partial government shutdown.
Businesses in Britain's dominant services sector reported the slowest sales growth in two years during the final three months of 2018, another sign of a dampening economic growth ahead of Brexit.
Markets will be looking for cues about interest rate hikes from a joint discussion between Federal Reserve chair Jerome Powell and former Fed chairs Janet Yellen and Ben Bernanke today.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion.
Meanwhile, the Australian dollar-denominated gold hit a record high yesterday at A$1 894.02 after the currency, often considered a gauge of global risk appetite, fell to its lowest level since 2009 in early Asian trade.
Gold pushed higher as investors looked for a safe-haven due to brutal moves in the Australian dollar, MKS PAMP Group traders said in a note.
“Australian producers were slow to realise the move but have since been seen consistently selling, taking advantage of the very bullish move.”
Investor appetite for gold has reflected in the rise of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund. SPDR holdings rose about 1% to 795.31 tonnes on Wednesday.