Gold shines as in­vestors shun risk

The Pak Banker - - MARKETS/SPORTS -

With grow­ing fears of an­other global re­ces­sion, gold on Satur­day struck $1,263.47 an ounce - the high­est level since Fe­bru­ary 6, 2015.

Gold prices glis­tened last week, strik­ing one-year highs as the pre­cious metal ben­e­fit­ted from its sta­tus as a haven in­vest­ment in times of eco­nomic tur­bu­lence.

With grow­ing fears of an­other global re­ces­sion, gold on Thurs­day struck $1,263.47 an ounce - the high­est level since Fe­bru­ary 6, 2015.

"Gold's sta­tus as the ul­ti­mate safe haven as­set has well and truly been con­firmed, yet again," said Fawad Raza­qzada, an­a­lyst at City In­dex trad­ing group.

"The buck-de­nom­i­nated pre­cious metal has also ben­e­fit­ted from a weaker dol­lar as hopes about fur­ther 2016 rate rises from the Fed­eral Re­serve have ba­si­cally been dashed."

In­vestors have been pour­ing into gold and other haven in­vest­ments such as the Ja­panese yen, as stock mar­kets tum­ble on ris­ing con­cerns over the global econ­omy, in par­tic­u­lar re­gard­ing slow­ing growth in China.

"The gold price is ben­e­fit­ting from tail­wind gen­er­ated by stock mar­kets... re­flect­ing the risk aver­sion dis­played by mar­ket par­tic­i­pants," Com­merzbank an­a­lysts said in a note to clients.

China is still set to sup­port de­mand for the metal go­ing for­ward, the World Gold Coun­cil (WGC) pre­dicted last week.

"Phys­i­cal de­mand will con­tinue to be sup­ported by strong cen­tral bank pur­chases, and con­tin­ued buy­ing of jew­ellery, bars and coins by house­holds across the world, led by In­dia and China," said Alis­tair Hewitt, head of mar­ket in­tel­li­gence at the WGC.

"If we just look at the year to date, the in­vest­ment case for gold is as strong as ever. While stock mar­kets have wob­bled, gold has per­formed well."

The WGC pub­lished its re­port for 2015, which said that to­tal de­mand for gold was vir­tu­ally flat com­pared with a year ear­lier at 4,212 tonnes.

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