Gold extends gains after biggest monthly rise in 4 years | Reuters - Firstpost
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Gold extends gains after biggest monthly rise in 4 years | Reuters

Updated: Mar 1, 2016 23:45 IST

#Argentina   #article   #Europe   #graphics   #Middle East   #United Kingdom  

LONDON Gold edged up on Tuesday, building on its biggest monthly gain in four years, as concerns over the global economy after downbeat data from China, the European Union and the United States fuelled interest in the metal as a haven from risk.

Spot gold was up 0.1 percent at $1,238.66 an ounce at 1442 GMT, while U.S. gold futures for April delivery were up 0.4 percent at $1,239.60.

Further inflows into gold-backed exchange-traded funds indicated buoyant investor appetite for gold. The largest, New York-listed SPDR Gold Shares, saw inflows of nearly 15 tonnes on Monday, taking holdings to their highest since 2014.

"This continuous talk of ETF buying is getting the traders interested," Afshin Nabavi, head of trading at MKS, said. "Gold is the only thing that has gone up in 2016."

The euro hit its lowest in almost three years against the yen on Tuesday after data showed euro zone manufacturing activity expanded at its weakest pace for a year despite more deep discounting.

An earlier report showed Chinese manufacturing sector activity shrank more sharply than expected in February, suggesting Beijing will have to ramp up stimulus to avoid a deeper economic slowdown. Overnight the Chinese central bank moved to resume its easing cycle.

On Monday, U.S. data showed contracts to buy previously owned homes fell to their lowest in a year in January, while the Chicago Purchasing Managers Index, a leading indicator of the U.S. economy, contracted last month.

"From our perspective, it's warranted to reconsider gold's role as insurance in a portfolio," Julius Baer analyst Carsten Menke said. "The risks of adverse market conditions have really risen."

Although global economic concerns have prompted investors to channel money into gold, rising prices have muted some physical demand in the major Asian gold consuming regions.

Gold's rally on Monday prompted the Chinese, the top consumers of gold, to sell the metal on Tuesday, one Hong Kong-based trader said.

India, the second-largest consumer, has reintroduced a local sales tax on gold jewellery, in a move officials hope will dampen demand. Indian jewellers will go on indefinite strike from Tuesday in protest.

Silver was flat at $14.87 an ounce, while platinum was up 0.8 percent at $936.26 an ounce and palladium was up 4.2 percent at $511.02 an ounce.

Palladium is rallying after underperforming other precious metals last month, easing 1.2 percent while gold climbed 10.7 percent, its biggest monthly rise since January 2012.

(Additional reporting by A. Ananthalakshmi in Singapore and Manolo Serapio Jr in Manila; Editing by Mark Trevelyan and David Evans)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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