Gold futures surged Monday, poised for their largest monthly gain in about four years, as continued skittishness around stocks fostered some demand for the precious metal, which is viewed as a haven asset.
Some traders also pointed to early demand from Chinese buyers as a factor helping support an upswing in the yellow metal’s price.
April gold GCJ6, +1.16% tacked on $13.10, or 1.1%, at $1,233.50 an ounce, after settling sharply lower Friday and erasing what would have been a modest weekly gain.
Still, the precious metal is on track to score a more than 10% gain in February, which would mark its biggest advance for a most-active contract, since January 2012, when the metal rose 11.1%, according to FactSet data.
The biggest influence going forward for gold is “likely to be risk appetite and concerns about markets and the global economy,” said Mark O’Byrne, research director at GoldCore.
“If stock markets begin to recover and make gains and risk appetite returns, then gold could come under selling pressure,” he said. “However, we believe the volatility seen in the first two months is likely to continue.”
Gold has been among the best performing assets this year, up over 16% year to date. Comparatively, the S&P 500 index SPX, +0.15% was off 4.7% this year, as of Friday’s close.
“The double-digit leap in gold prices to start the year reflects fears of a slow economy and the market pricing almost no [U.S. Federal Reserve interest] rate hikes in 2016,” said Rob Haworth, senior investment strategist, U.S. Bank Wealth Management.
Viewed as an asset that attracts bids in times of economic and stock-market uncertainty, gold has enjoyed some of its best buying in more than decade, largely due to concerns about the health of the global economy and the emergence of negative interest rates in Japan and parts of Europe.
But Haworth said that with rising U.S. core inflation, the Fed is still likely to hike rates this year. He expects two or three increases starting at the June meeting if inflation and the job market data continue to remain solid. That should limit the upside for gold in the coming month, he said.
For now, gold’s sister metal, silver, was also luring bidders. May silver SIK6, +1.40% was 13 cents higher, or 0.9%, at $14.85 an ounce, with the metal on track for a more than 4% monthly gain.
Meanwhile, O’Byrne said he spotted signs that demand for gold in China had ticked higher late in the Asian trading day.
Appetite for gold came as Asian markets finished mostly lower, led by the Shanghai Composite SHCOMP, -2.86% down 2.9%. Also Monday, the People’s Bank of China cut the level of reserves which major banks are required to hold by 0.5%—a move aimed at bolstering credit growth for the world’s second largest economy.
In other metals, May copper HGK6, +0.05% was down half a cent at $2.121 a pound, trading more than 2% higher for the month. April platinum PLJ6, +1.89% rose $14.50, or 1.6%, to $929.60 an ounce,—ready to score a monthly gain of over 6%, while June palladium PAM6, +2.22% added $13.05, or 2.7%, to $495.50 an ounce, trading down about 0.6% on the month.
Source: MarketWatch
