Gold futures climbed back above $1,100 an ounce on Wednesday, as oil prices renewed their slump and dragged global stock markets along with them, lifting the metal’s investment appeal.
February gold GCG6, +1.19% gained $11.30, or 1%, to trade at $1,100.40 an ounce, after the precious metal finished 0.2% lower on Tuesday. Prices haven’t settled above $1,100 since Jan. 7.
Rising demand for assets perceived as a safer investment, while investors looked to shun those viewed as risky such as equities, helped lift gold and other haven securities, including 10-year Treasury notes TMUBMUSD10Y, -4.70%
Also the dollar fell to a one-year low against the yen USDJPY, -1.04% which is viewed as a haven currency, at ÂĄ115.
With the Federal Reserve interest-rate decision behind us, “and no real reason to believe rates will go up in the near future, gold has been allowed to finally trade without the Fed’s training wheels,” said Adam Koos, president of Libertas Wealth Management Group.
Given that, gold could continue to trade with an inverse correlation to that of the U.S. stock market, he said. “As a hard asset, and a valuable one at that, those worried that this might be the next big stock market crash will likely flee to gold, cash instruments, [Treasurys] and other fixed income investments.”
Still, some strategists believe gold’s lack of substantial moves amid the recent rout in markets is a bearish sign.
“Technically, gold bears still have the overall near-term technical advantage,” Jim Wyckoff, senior market analyst at Kitco, wrote in a Wednesday note.
“However, recent price action that has been choppy and sideways does favor the bulls and begins to suggest a market bottom may be in place. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the January high of $1,113.10,” Wyckoff said.
Economic data from the U.S. painted a mixed picture of the world’s largest economy and did little to sap gold’s recent gains. Housing starts fell short of economists’ forecasts, falling 2.5% in December, while the consumer-price index, a measure of inflation, declined 0.1% last month, but core CPI, which excludes volatile food and energy prices, rose 0.1%.
In other metals, March silver SIH6, -0.29% edged down by 3.6 cents, or 0.3%, to $14.085 an ounce, high-grade copper for March delivery HGH6, -0.86% lost 1.7 cents, or 0.9%, to trade at $1.961 a pound. April platinum PLJ6, -1.70% was $13.40, or 1.6% lower, at $816.90 an ounce, while March palladium PAH6, -2.60% shed $12.50, or 2.5%, to $484.40 an ounce.
