On Wednesday gold price exceeded $1,300 an ounce for the first
time in five months on speculation slowing global growth will
prompt central banks to boost stimulus, driving demand for a shelter.
Bullion for immediate delivery climbed as much as 0.6 percent to $1,303.63 an ounce and traded at $1,300.58 by 3:20 p.m. in Singapore, according to Bloomberg generic pricing.
Prices jumped 4.7 percent last week, the most since 2013, as investors sought safety from turmoil in currency markets after the Swiss central bank unexpectedly abandoned the franc’s cap against the euro. The metal climbed 9.8 percent this year.
As Bloomberg reports, assets in exchange-traded products backed by the metal are heading for the first monthly gain since July. Open interest in New York futures and options is at the highest in eight weeks, and money managers have increased their net-bullish position to the largest since August.
After evading gold for two years, investors are returning
to the metal amid concern U.S. growth will not be sufficient to overweigh
weakness in foreign economies.
This month the International Monetary Fund and the World Bank lowered forecasts for global growth, even as they upgraded estimates for American expansion. Policy makers in Europe and Asia are being challenged to come up with new ways to spur growth amid prolonged below-target inflation.
“Capital is flowing into safe assets such as gold,” said
Mark To, head of research at Wing Fung Financial Group, a trader
and refiner in Hong Kong.
“The market is currently full of news that’s supportive of higher gold prices - expectations for lower global growth, uncertainty around what the ECB will do and more stimulus around the world,” he said, referring to the European Central Bank by its initials.
Analysts are split on the 2015 outlook. Goldman Sachs Group Inc. and Societe Generale SA expect the metal to decline, with SocGen forecasting prices to reach $1,000 by Dec. 31, it said in a Jan. 14 report. Standard Chartered Plc expects the metal to rally to $1,320 by the fourth quarter, it said Jan. 20.
Last year gold fell 1.4 percent after a 28 percent loss in 2013, marking the first consecutive annual slide since 2000. A surge in equities and an improving U.S. economy prompted some investors to lose faith in the metal. The Standard & Poor’s 500 Index of shares is heading for a second monthly drop, the longest slump since 2012.
Silver climbed as much as 1.9 percent to $18.3327 an ounce, the highest since September, and traded at $18.2528.
