Gold eyes best week in 4 years as market turmoil boosts haven appeal
- Gold on Friday clung to sharp overnight gains that pushed the metal to a one-year high, and looked set to post its best week in over four years as stock market turmoil stoked safe haven demand. Also helping gold was dovish comments from Federal Reserve Chair Janet Yellen.
Stock markets fell worldwide on Thursday on fears over the health of the global economy and the banking sector, with MSCI's global stock index closing more than 20 percent below its all-time high.
Safe-haven assets shone across the board. U.S. 10-year Treasury yields hit their lowest since 2012, while the Japanese yen climbed to its highest in 15 months against the dollar.
"The risk-off sentiment that pervaded markets overnight saw gold briefly push above $1,260 amid rising safe haven buying, making it the best performing commodity in 2016," ANZ analysts said in a note.
For the week, spot gold is up 5.5 percent, the biggest weekly gain since October 2011.
Assets in SPDR Gold Trust, the world's top gold-backed exchange-traded fund, rose 1.99 percent to 716.01 tonnes on Thursday, the biggest inflow in two months.
- Global stocks slumped Thursday as investors shunned risk worldwide amid concern that central-bank efforts to support economic growth are losing potency. Federal Reserve Chair Janet Yellen yesterday told Congress that market turbulence may weigh on the outlook for the economy if it persists. The metal jumped as much as 5.8 percent to $1,263.90 an ounce, the highest since February 2015, and the gain was the biggest intraday advance since 2009.
Bullion has climbed 18 percent this year, making it the best-performing commodity. The outlook for U.S. interest rates to stay low has boosted gold's appeal because it doesn't pay interest like some other assets.
- Strong safe-haven demand for gold sent the precious metal soaring to a 12-month high above $1,260.00 Thursday. Another big sell off in world stock markets sent investors and traders scrambling into the gold market. There are growing concerns about the collective health of the major world economies. Gold prices have risen around 15% the past six weeks. April Comex gold was last up $54.00 at $1,248.60 an ounce. March Comex silver was last up $0.523 at $15.81 an ounce.
There was keen worldwide investor and trader risk aversion Thursday as most world stock markets suffered sharp losses. Falling crude oil prices, worries about the European financial system and weak overall world economic growth prospects are combining to spook the world marketplace. The Stoxx Europe 600 index was down nearly 4% Thursday. Hong Kong’s Hang Seng index was also down around 4% on the day. China and Japan markets were closed Thursday for holidays. The Japanese yen has soared against the U.S. dollar on safe-haven demand from market participants in the Asian region
Technically, April gold futures prices closed nearer the session high and scored a fresh 12-month high today. Prices are in an accelerating seven-week-old uptrend on the daily bar chart. Bulls have the solid near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,200.00. First resistance is seen at today’s high of $1,263.90 and then at $1,275.00. First support is seen at $1,240.00 and then at $1,225.00. Wyckoff’s Market Rating: 8.0
Reference: Reuters, Kitco, NZ Herald
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