Gold rises as sliding stocks boost safe-haven demand
Gold prices rose on Thursday, helped by a weaker dollar and as a recovery rally in global stock markets fizzled out, driving investors towards the safe-haven asset.
"The weaker dollar index is supporting the buying interest in gold and the U.S. stock indexes have pulled back significantly, which has also helped," said Jim Wyckoff, senior analyst at Kitco Metals.
"Also, the technical pasture of the gold market has become significantly bullish on a near-term basis, which is inviting some chart-based buying too."
A global equity rally fuelled by a dramatic surge on Wall Street ran out of steam on Thursday, after a fall in China`s industrial profits showed the pressures on the global economy. U.S. stocks fell sharply on Thursday. [MKTS/GLOB] [.N]
The dollar index <.dxy>, a gauge of the greenback`s value against six major currencies, fell 0.6 percent on Thursday, making gold cheaper for buyers of other currencies. [USD/] The partial U.S. government shutdown, which is widely expected to continue, was also supporting gold, analysts said.
"A slowing world economy might bring in some safe-haven demand. But any reduction in world economic growth will also reduce consumer demand for gold in countries like China and India," Wyckoff said.
Investor confidence in bullion was reflected in a surge in the holdings of SPDR Gold, the largest exchange-traded fund. SPDR holdings rose 2.1 percent on Wednesday, the best one-day percentage gain since July 2016. [GOL/ETF]
"There has been an extensive surge in the gold exchange-traded fund holdings and there is absolutely no shortage of momentum there. Investors are just preparing themselves by buying gold as there are several uncertainties heading into 2019," said Naeem Aslam, chief market analyst at Think Markets UK.
SPDR holdings, at their highest since August, have risen about 8 percent since touching more than 2-1/2-year lows in October.
Among other metals, silver
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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