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PRECIOUS-Flight to safety sends gold to 9-wk high as stocks slump

Published 07/01/2016, 05:59 pm
© Reuters.  PRECIOUS-Flight to safety sends gold to 9-wk high as stocks slump
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* Spot gold, U.S. futures climb above $1,100/oz

* China shares slip 7 pct, Asian shares at 3-month low

* Equities decline to keep gold supported (Updates prices)

By A. Ananthalakshmi

SINGAPORE, Jan 7 (Reuters) - Gold climbed above $1,100 an ounce for the first time in nine weeks on Thursday as investors channelled money into the safe-haven metal amid a global stock market rout, worries over the Chinese economy and heightened geopolitical tensions.

China stocks .CSI300 fell 7 percent on Thursday after less than half an hour of trading, triggering a circuit breaker that suspended trading for the rest of the day.

China also guided the yuan sharply lower, deepening concerns about the economy and sending Asian shares to a three-month low. MKTS/GLOB

Spot gold XAU= rose to a nine-week high of $1,102.80 an ounce, before paring some gains to trade up 0.5 percent at $1,099.32 by 0644 GMT. U.S. gold futures also jumped for a fourth straight session to a nine-week high of $1,102.50.

"Gold continued to climb with rising safe-haven demand amid the rebound in market volatility. Rising equities losses and surprising devaluation of the yuan are painting a positive picture for gold," ANZ said.

Gold, often seen as an alternative investment during times of geopolitical and financial uncertainty, benefited from the risk-averse sentiment in the market along with other haven assets such as the Japanese yen and U.S. Treasuries.

"Gold is clearly re-establishing its role as a safe-haven. For as long as global stock markets - in particular China's - appear wobbly, gold is likely to attract a good bid," HSBC analyst James Steel said.

A raft of data releases from China in coming weeks is likely to show activity continuing to slow, adding to global concerns about the country's economic outlook for 2016. World Bank on Wednesday cut its global economic growth forecast for 2016, citing the weak performance of major emerging market economies. to market fears was North Korea's announcement it had successfully tested a powerful nuclear bomb on Wednesday, a move that escalated tensions in the Korean peninsula. news came just days after tensions flared in the Middle East between Saudi Arabia and Iran after Riyadh executed a Shi'ite cleric critical of Saudi policy. was also supported by a softer dollar and the release of the minutes of the Federal Reserve's last policy meet. The minutes assured markets that the Fed would hike rates gradually this year. other precious metals, silver XAG= and platinum XPT= rose, tracking gold.

Palladium XPD= , which as an autocatalyst metal is more exposed to economic weakness, slid to a near-5-1/2-year low of $501 an ounce before paring some losses to trade down 0.9 percent.

PRICES AT 0644 GMT Metal

Last

Change Pct chg

Spot gold

1099.32

5.02

0.46 Spot silver

14.055

0.055

0.39 Spot platinum

878.1

2.45

0.28 Spot palladium

503.45

-4.3

-0.85 Comex gold

1099.5

7.6

0.7 Comex silver

14.055

0.079

0.57

COMEX gold and silver contracts show the most active months

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