Gold closes out 2018 on a strong note, invigorated by volatile trading.
Gold is closing out 2018 on a strong note, its haven demand reinvigorated by volatile trading in global equities, rising concern about the economic outlook and a drawn-out government shutdown in the U.S.
Spot bullion is holding near a six-month high after topping $1,280 an ounce, and the metal is set for the best monthly gain in almost two years. December’s rally has pared an annual decline, the first full-year loss since 2015.
Gold gained ground this quarter as world equities plunged and doubts stacked up about the pace of growth in 2019. A weakening dollar in December aided the rally amid expectations the Federal Reserve will dial back the pace of rate increases next year. That’s also helped to boost holdings in gold-backed exchange-traded funds.
“For gold prices, I think there is upside to be seen in 2019,” Jingyi Pan, market strategist at IG Asia, told Bloomberg TV on Monday, citing prospects for fewer tightening moves from the U.S. central bank.
Spot gold hit $1,284.15 an ounce on Monday, the highest price since mid-June, and it’s up 4.9 percent this month, according to Bloomberg generic pricing. It was little changed at $1,280.17 an ounce at 9:52 a.m. in New York.
Prices held their ground even after U.S. President Donald Trump struck an upbeat tone on his trade dispute with China, one of the lingering threats to growth. Trump and Chinese counterpart Xi Jinping spoke at length by phone Saturday, with each expressing satisfaction.
A bullish breakout will take prices toward $1,309 in the current term, according to Benjamin Lu, an analyst at Phillip Futures. Haven demand will “remain vigorous” in the first quarter on economic and geopolitical concerns, he said.
Adding to the bulls’ case, data showed manufacturing China shrank. Its Purchasing Managers Index fell to 49.4 in December, below the level of 50 that signals contraction.