Gold hits six-month peak on global economy worries, U.S. government shutdown

By Sethuraman N R BENGALURU (Reuters) - Gold rose to six-month highs on Wednesday as investors kept purchasing the precious metal as a safe haven against an uncertain global economy, volatile financial markets, a partial U.S.

Reuters December 27, 2018 00:05:55 IST
Gold hits six-month peak on global economy worries, U.S. government shutdown

Gold hits sixmonth peak on global economy worries US government shutdown

By Sethuraman N R

BENGALURU (Reuters) - Gold rose to six-month highs on Wednesday as investors kept purchasing the precious metal as a safe haven against an uncertain global economy, volatile financial markets, a partial U.S. government shutdown and U.S. President Donald Trump's criticism of the Federal Reserve.

Spot gold rose 0.8 percent to $1,278.81 per ounce at 11:26 a.m. EST (1626 GMT). It touched $1,279.06, its highest since June 19 earlier. U.S. gold futures were up 0.8 percent at $1,281.80 per ounce.

"The big concern for investors is the sell-off we are seeing in equity markets, the comments coming from Trump over the Federal Reserve and whether the Fed's independence is going to be under pressure now," said David Song, an analyst at DailyFX.

With investors still worried about the global economy and corporate profits, the U.S. dollar and equities pared early gains. Roughly three-fourths of S&P 500 stocks were in bear market territory.

The partial shutdown of the U.S. federal government over Trump's demand for border wall funding and the president's criticism of the Fed have unnerved investors. Other concerns included the departure of U.S. Defense Secretary James Mattis and U.S.-China trade tensions.

"We are near-term constructive on gold,". Song said. "There are concerns about global growth in 2019, global geo-political uncertainties and Trump's continued attack on the Federal Reserve and how long the government shutdown will continue in the U.S."

Spot gold is up 4.7 percent for the month thus far, on track for its biggest December gain in about 10 years.

Gold is seen as a hedge against political and economic worries. Holdings of SPDR Gold, the largest gold exchange-traded fund, are at their highest point since August and have risen about 6 percent since touching more than 2-1/2-year lows in October.

"Gold is printing day's highs as the U.S. dollar dips with markets continuing to scale a wall of worry," said Tai Wong head of base and precious metals derivatives trading at BMO.

"Gold looks like it's breaking out higher with a short term target of $1,300 and medium term target of $1,360-$1,370. More importantly the algorithmic trading programs which are practically all momentum followers will continue to push gold higher as the trend remains clearly up."

Among other metals, silver gained 2.9 percent to $15.16 per ounce, its highest since Aug. 13.

Platinum was up 2.1 percent at $799.30. Palladium was up 0.2 percent at $1,248.30 per ounce.

(Reporting by Nallur Sethuraman and K. Sathya Narayanan in Bengaluru; Editing by Robin Pomeroy and David Gregorio)

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

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.