Tags: Gold | Rallies | Global | Stock

Gold Rallies to 6-Week High on Global Stock Losses

Tuesday, 09 Dec 2014 06:38 PM

Gold futures jumped to a six-week high Tuesday as declines in equity markets revived demand for the metal as a haven. Silver surged more than 5 percent.

More than $100 billion was wiped from the value of world equity markets Monday, and global shares fell again Tuesday. Gold extended gains as the dollar headed for the biggest drop in a month against a basket of 10 currencies.

Since Nov. 7, the metal has climbed 9 percent from a four- year low. Signs that central banks in Europe and Asia will increase money supply reignited gold’s appeal as a store of value. Swings in oil prices are increasing bullion’s volatility as traders judge the outlook for inflation.

“There are equity market concerns and an increase in the flight away from risky assets to quality,” James Steel, an analyst at HSBC Securities (USA) Inc. in New York, said in a telephone interview. “Gold seems to be benefiting from that more than anything else.”

Gold futures for February delivery climbed 3.1 percent to close at $1,232 an ounce at 1:52 p.m. on the Comex in New York. Earlier, the price reached $1,239, the highest for a most-active contract since Oct. 23. Aggregate trading was 54 percent above the 100-day average, according to data compiled by Bloomberg.

As policy makers try to revive economies, major central banks will together add almost three times more liquidity next year than they did in 2014, according to Credit Suisse Group AG. Net-bullish holdings in gold futures and options more than doubled in the past three weeks, U.S. government data show.

Changing Sentiment

“Stimulus from every corner of the global economy is now entrenched, and that’s bullish for precious metals,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “This is a change of sentiment in a huge way, because investors stopped looking at U.S. interest rates possibly rising next year, to see the fact that every other major economy is easing at a breakneck pace to try and quell the slowdown.”

The Federal Reserve will meet next week as policy makers debate the timing of the first rate increase in eight years. Rising borrowing costs cut gold’s allure because bullion generally offers investors returns only through price gains.

Futures climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent in a bid to shore up economic growth. The metal tumbled 28 percent last year as gains for the U.S. economy and a rally in equities prompted some investors to lose faith in the metal as a store of value.

India Rules

India, which accounts for about a quarter of global bullion demand, eased import restrictions on the metal, Finance Minister Arun Jaitley said Tuesday. The nation may change a rule mandating that “star trading houses” export all of their gold imports, Reuters reported Tuesday, citing an unnamed source.

Silver futures for March delivery jumped 5.3 percent to $17.134 an ounce on the Comex, the biggest gain since Dec. 1. The price reached $17.23, the highest since Oct. 29.

On the New York Mercantile Exchange, platinum futures for January delivery advanced 1.4 percent to $1,246.80 an ounce. The price reached $1,256.30, the highest since Oct. 30. Trading was 75 percent percent above the 100-day average, according to Bloomberg data.

Palladium futures for March delivery rose 1.7 percent to $811.60 an ounce.

This year, palladium has climbed 13 percent, and gold is up 2.5 percent. Silver has slumped 12 percent, while platinum dropped 9.2 percent.

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Gold futures jumped 3.1 percent to a six-week high Tuesday as declines in equity markets revived demand for the metal as a haven. Silver surged more than 5 percent.
Gold, Rallies, Global, Stock
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2014-38-09
Tuesday, 09 Dec 2014 06:38 PM
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