Gold hits nine-week high as China worries hit stocks
Gold climbed above $1,100 an ounce for the first time in nine weeks on Thursday as the dollar fell and investors channeled money into safer assets for a fourth straight day after worries about the Chinese economy hit global stocks.
New York/London: Gold climbed above $1,100 an ounce for the first time in nine weeks on Thursday as the dollar fell and investors channeled money into safer assets for a fourth straight day after worries about the Chinese economy hit global stocks.
Shares on major exchanges fell for a sixth consecutive day while crude oil prices bounced back from multiyear lows as volatile markets digested another move lower in the yuan and China`s efforts to stabilize its sinking stock market.
"Gold`s strength is probably going to be relatively short term, but there is an upside risk to gold, if the view that China is going to pull the whole world into recession becomes stronger," Citigroup metals strategist David Wilson said.
"But if the US and Europe continue to grow, gold will go weaker ... Chinese stock markets had got massively over inflated because a lot of money piled into it and now people have come back to reality."
Spot gold rose to a nine-week high of $1,109.94 an ounce at one stage and was up 1.3 percent at $1,108.45 an ounce at 2:03 p.m. EST (1903 GMT). US gold futures settled up 1.5 percent at $1,107.80 an ounce, also a nine-week high.
"PGMs on the other hand were heavily offered with palladium losing a big figure after a breakdown of $523.50 support," said Amaryllis Gryllaki, vice president of sales, Global Metals, for TD Securities, in a research note.
"Platinum follows and there is a stark absence of consumer interest at these fresh lows."
Palladium, however, which is more exposed to economic weakness because it is used as an autocatalyst metal, slipped to $481.67 an ounce, its lowest since August 2010. It followed weakness in crude oil and industrial metals.
"What is bad for most of the other commodities is currently good for gold, which is living up to his reputation as a safe haven," Commerzbank analyst Daniel Briesemann said.
Bullion was also supported by a softer dollar and the release of the minutes of the Federal Reserve`s last policy meeting, assuring markets that US interest rates would be increased only gradually this year.
Gold, often seen as an alternative investment during times of geopolitical and financial uncertainty, benefited from the risk-averse sentiment this week after tensions escalated in the Korean peninsula and flared in the Middle East.
China, the world`s sixth-largest official sector gold holder, added more to its reserves in December.
Spot platinum dropped 0.3 percent to $873.30 an ounce. Silver rose 2.1 percent to $14.30 an ounce.