SINGAPORE Gold on Friday clung to sharp overnight gains that pushed the metal to a one-year high, and looked set to post its best week in over four years as stock market turmoil stoked safe haven demand.
Stock markets fell worldwide on Thursday on fears over the health of the global economy and the banking sector, with MSCI's global stock index closing more than 20 percent below its all-time high.
Safe-haven assets shone across the board. U.S. 10-year Treasury yields hit their lowest since 2012, while the Japanese yen climbed to its highest in 15 months against the dollar.
Spot gold XAU= rose to $1,260.60 on Thursday, its highest in a year, before paring some gains to close up 4 percent in its biggest daily gain in about 2-1/2 years. On Friday, it eased 0.8 percent to $1,236.60 by 0042 GMT.
"The risk-off sentiment that pervaded markets overnight saw gold briefly push above $1,260 amid rising safe haven buying, making it the best performing commodity in 2016," ANZ analysts said in a note.
For the week, spot gold is up 5.5 percent, the biggest weekly gain since October 2011.
Tracking spot prices, U.S. gold futures GCcv1 are set to post a gain of 7 percent for the week, the biggest such gain since 2008.
Also helping gold was dovish comments from Federal Reserve Chair Janet Yellen.
Testifying for a second day before U.S. lawmakers, Yellen again stressed that the U.S. central bank was not on a "pre-set" path to return policy to "normal" amid a worsening meltdown in global stock markets.
Yellen said she still expects the Fed will gradually raise interest rates this year, given a strong U.S. labor market and steady economic growth.
That, however, did not deter investors from piling on to gold, a non-interest paying asset, as expectations grow that the Fed would not be able raise rates this year.
Assets in SPDR Gold Trust, the world's top gold-backed exchange-traded fund, rose 1.99 percent to 716.01 tonnes on Thursday, the biggest inflow in two months.
Jeffrey Gundlach, the co-founder and chief executive officer of DoubleLine Capital, said on Thursday that gold prices are likely to reach $1,400 an ounce as investors lose faith in central banks.
(Reporting by A. Ananthalakshmi; Editing by Richard Pullin)
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First Published On : Feb 12, 2016 07:15 IST