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Vietnam Gold Market News

Vietnam Business » Vietnam Gold Market News » Gold Settles Above $1,226 on Safe-Haven Buying

Gold Settles Above $1,226 on Safe-Haven Buying

Gold rose to a 1-1/2 month high Monday, after gloomy Japanese economic data prompted safe-haven buying by investors worried about the global economy. Silver and platinum group metals, whose prices usually reflect economic sentiment because of their industrial uses, rose with gold. A sharp drop by the dollar also boosted gold, which resumed its usual inverse correlation with the dollar.

Japans economy expanded just 0.1%, and analysts see weakness ahead.

"You can consider this to be safe-haven buying. It is also supported by the overall low interest-rate environment that makes gold additionally attractive to investors," said Alexander Zumpfe of Heraeus Metals.

Spot gold last rose toward $1,226 midday Monday, from $1,214.50 late in New York Friday. It hit an intraday day high of $1,227.15-its highest since July 1. Bullion struck a record high around $1,264 in June.

U.S. gold futures for December delivery settled $9.60 higher at $1,226.20 an ounce.

U.S. Treasury prices jumped, with the 10-year yield hitting a 17-month low as weak economic growth around the world spurred talk of deflation.

Gold managed to hold firm above $1,200 an ounce after the Federal Reserves downgrade of its economic outlook last week, sending Wall Street down more than 3%.

Gold, which had traded in a broad range for two months, has been in rally mode after a 1.5% rise last Thursday, its biggest one-day gain in more than two months.

"There are jitters about the global economic recovery, but also the fact that were trading comfortably above $1,200 is prompting some interest in the gold market," said Eugen Weinberg, an analyst at Commerzbank. "Also I would not be surprised to see more physical buying in front of the festive season in India."

Physical gold demand tends to rise in August as jewelers stockpile inventory ahead of the start of Indias wedding season and the Hindu festival of Dhanteras, traditionally major gold-buying events.

Holdings were unchanged in the worlds largest bullion-backed ETF, SPDR Gold Trust [GLD 119.73 0.99 (+0.83%) ], suggesting that some investors were happy to hold on to bullion after recent U.S. economic data pointed to weakness in the economy.

Currency Correlations

Gold said that gold appeared to re-establish its inverse correlation relationship with the dollar and a positive link with the euro.

The 25-day simple correlation between gold and dollar was a plus 0.2 Monday, sharply lower than a high of over plus 0.8 earlier in August.

The correlation between gold and the U.S. currency has been erratic so far this year, as the metal and the dollar both benefited from safe-haven demand due to fears about global growth at times.

In other metals, silver rose in line with gold, trading around $18.40 an ounce from $18.08 late on Friday in New York. Platinum firmed toward $1,529.00 an ounce from $1,520 an ounce and palladium neared $481.65 an ounce from $472.

Vietnam Business And Financial News Network. Source [stox.vn]

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