Gold steadies near three-month high as economic worries persist

NEW YORK/LONDON — Gold steadied after touching threemonth highs on Tuesday, underpinned by global growth concerns and as another sharp drop in the oil price pushed investors toward safe-haven assets.

Weak Chinese manufacturing data on Monday underscored the challenges for the world economy, while volatility in oil and other assets fueled interest in gold as a haven from market turmoil.

Spot gold touched $ 1,130.30 an ounce early on Tuesday, its strongest since Nov. 3, and was little changed at $1,128.31 at 3:10 p.m. EST (2010 GMT). US gold for April delivery settled down 0.07% at $1,127.20 an ounce.

Traders noted some long liquidation pushed spot prices to a session low of $1,122.04 an ounce after failing to hold above the 200- day moving average at $1,129.49.

“In the near term gold is finding some support in the dovish tone from central banks last week, notably the Fed and the Bank of Japan,” said Jens Pedersen, senior analyst at Danske Bank.

Gold, which as a non-yielding asset tends to rise on ultra-low rates, benefited from the Bank of Japan’s introduction last week of negative interest rates and increasing expectations that the US Federal Reserve will not raise rates as many times as previously expected in 2016. However, gold prices have been capped to the upside as the Fed has kept the door open for a rate increase in March. “It is perfectly possible that it will move towards $1,150 (in coming weeks) and then it will depend on the equity markets,” said Carsten Menke, an analyst at Julius Baer. “Clearly this is an environment that is supportive for gold in the short term.”

Reflecting growing confidence in gold, holdings of SPDR Gold Trust, the world’s largest goldbacked exchange- traded fund, rose to 21.9 million ounces on Monday, the most since Nov. 3.

For palladium, more ETF outflows are likely in the coming months after subdued industrial activity globally caused liquidation, taking holdings to the lowest since mid-2014, UBS Wealth Management Research said.

A London Bullion Market Association survey was bullish on the four precious metals, calling for average gold price in 2016 to be up 1.1% from 2015 at $1,103 an ounce. In silver and platinum it forecast 5.4% rises to $14.74 and $911 respectively, and a 12.7% increase in palladium to $568. Spot silver was down 0.3% at $14.28, platinum was down 1.7% at $855.11 an ounce and palladium was down 2.3% at $488.62. —