Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

PRECIOUS-Gold jumps to near 3-month top as stocks, oil tumble

Published 26/01/2016, 05:49 pm
© Reuters.  PRECIOUS-Gold jumps to near 3-month top as stocks, oil tumble
XAU/USD
-
XAG/USD
-
GC
-
SI
-
CL
-
PA
-
PL
-
VOWG_p
-
DXY
-

* Dollar also under pressure as Fed starts policy meeting

* Fed may repeat dovish stance amid global headwinds

* Gold could test November high of $1,138 (Recasts, adds comment, updates prices)

By Manolo Serapio Jr

MANILA, Jan 26 (Reuters) - Gold rallied to its highest since November on Tuesday, with investors shifting to safe-haven assets as worries over a slowing global economy hit stocks and crude oil again.

The Federal Reserve is expected to take notice of the macroeconomic headwinds from China to Europe when policymakers meet later in the day, boosting hopes that it may go easy in hiking U.S. interest rates further.

That bodes well for gold, which has risen nearly 5 percent so far this year, after losing more than 10 percent in 2015.

Spot gold XAU= was up 0.5 percent at $1,112.86 an ounce by 0635 GMT, after earlier peaking at $1,113.54, its highest since Nov. 4.

"Gold might go for a run," said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore, adding the metal could test $1,138, reached on Nov. 3. "If that is breached, it could go to $1,160."

"We've heard some demand increasing in China because the stock market and currencies - people don't have confidence in these anymore - so the only one that they are looking at at the moment is gold," said Lan.

Asian stocks skidded, with Chinese shares down 5 percent, after oil prices fell back below $30 a barrel. MKTS/GLOB

U.S. gold for February delivery GCcv1 rose 0.7 percent to $1,113.10 an ounce.

The Federal Open Market Committee starts a two-day policy meeting later on Tuesday, and is widely expected to leave its federal funds rate unchanged at 0.25-0.50 percent. probability of another rate increase at the next Fed meeting in March has eased, with some analysts seeing it postponed to later in the year.

That puts downward pressure on the dollar .DXY and benefits gold.

At this week's meeting, it is likely that "the Fed will reiterate its dovish stance and this should push gold prices up", INTL FCStone analyst Edward Meir wrote to clients.

Meir said the poor shape of the U.S. equity market shows "a major capitulation will be needed in order to clear out much of the selling", suggesting investors should keep a bullish gold bias in the near term.

Spot platinum XPT= was down 0.6 percent at $853.24 an ounce, but well off last week's seven-year trough of $806.31.

Platinum is forecast to average less than $1,000 an ounce in 2016 for the first time in more than a decade as global growth concerns and demand fallout from the Volkswagen VOWG_p.DE scandal grip the market, a Reuters poll showed. palladium XPD= slipped 0.6 percent to $486.90 an ounce and silver XAG= gained 0.3 percent to $14.27.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.