Gold holds firm above $1,230/oz as investors seek refuge | Reuters

LONDON Gold rose above $1,230 an ounce on Wednesday, acting as foil against risk alongside top-rated government bonds as oil's fall rippled into global equity markets.

hidden February 25, 2016 01:45:12 IST
Gold holds firm above $1,230/oz as investors seek refuge
| Reuters

Gold holds firm above 1230oz as investors seek refuge
 Reuters

LONDON Gold rose above $1,230 an ounce on Wednesday, acting as foil against risk alongside top-rated government bonds as oil's fall rippled into global equity markets.

Spot gold rose 0.7 percent to $1,235.64 an ounce by 1222 GMT, after gaining 1.5 percent in the previous session, when prices benefited from strong inflows into bullion funds.

The market's rediscovered role as a shelter for risk-averse investors seemed to be gaining traction, traders and analysts said, even as the dollar gained ground against a basket of major currency rivals.

Under most circumstances, a strong dollar makes gold prices less attractive for non-U.S. investors.

"Gold is rising on the back of weak risk appetite, but what stands out today is that the market is rising even though the dollar is higher as well," said Jens Pedersen, senior analyst at Danske Bank.

"We've definitely reached a new range above $1,200 due to re-pricing risks of Fed rate hikes," Pedersen said. He added that further sustained gains may be capped until the path for monetary policy is clearer.

Technically, gold looks set to test recent highs at $1,240 and then a one-year top of $1,260, MKS Group said in a note.

Shares fell in Europe and Asia as a nascent recovery in crude prices lost momentum after Saudi Arabia's oil minister effectively ruled out production cuts by major producers any time soon. [MKTS/GLOB]

The yen, also considered a safe haven, gained against key peers such as the dollar and euro. [FRX/]

Gold has gained around 16 percent so far this year as investors have channelled money into the asset on concerns over the global economy and financial instability, and the repricing of expectations for U.S. interest rate rises.

Assets in SPDR Gold Trust, the top gold-backed ETF, are at their highest since March 2015. The fund's inflows since the beginning of the year have already surpassed outflows for the whole of 2015.

Inflows have offset a lack of interest from key Asian buyers, who have taken advantage of the gold rally to sell bullion and take profits.

Turning to U.S. monetary policy, prices for U.S. fed funds futures suggest investors see little chance of any increases this year.

"The sustainability of gold's rally comes down to the Fed and the market pricing in only one or no rate increases this year," Societe Generale's Robin Bhar said.

The Fed may need to keep U.S. interest rates unchanged for an extended period to give inflation time to rise back to the central bank's 2 percent target, Dallas Fed chief Robert Kaplan said on Tuesday.

Among other precious metals, silver rose 0.3 percent to $15.34. Platinum was unchanged at $943.15, rebounding from a two-week low of $913.50 reached earlier this week. Palladium fell 0.3 percent to $498.90.

(Additional reporting by A.Ananthalakshmi in Singapore; Editing by Mark Heinrich)

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

Updated Date:

also read

Gold price today: 10 grams of 24-carat stands at Rs 51,870; silver at Rs 59,800 per kilo
Business

Gold price today: 10 grams of 24-carat stands at Rs 51,870; silver at Rs 59,800 per kilo

According to the MCX, gold futures increased by 0.35 per cent to Rs 50,810.00 and silver futures also witnessed a rise of 0.92 per cent and settled at Rs 60,220.00

Gold price today: 10 grams of 24-carat sold at Rs 51,990; silver at Rs 60,200 per kilo
Business

Gold price today: 10 grams of 24-carat sold at Rs 51,990; silver at Rs 60,200 per kilo

According to the MCX, gold futures fell by 0.56 per cent to Rs 50,619.00 and silver futures witnessed a fall of 1.92 per cent and settled at Rs 59,483.00

Gold price today: 10 grams of 24-carat gold stands at Rs 51,760; silver at Rs 60,500 per kilo
Business

Gold price today: 10 grams of 24-carat gold stands at Rs 51,760; silver at Rs 60,500 per kilo

Updated Multi Commodity Exchange (MCX) data reveals that gold futures fell by 0.24 percent to Rs 50,780.00. Silver futures, which are expected to mature on 5 July, witnessed a fall of 0.69 percent and settled at Rs 60,231.00.