Gold is headed for a third weekly gain after turbulent equity markets sent investors hunting for haven assets amid global growth concerns. Futures breached $1,300 an ounce in New York and spot gold flirted with the level in early London trading, before dropping back as stocks in Europe and Asia recovered some of their losses ahead of fresh trade negotiations between the U.S. and China next week.
Although a breakthrough in trade talks could impede further gains for gold, sentiment among traders and analysts remained bullish for an eighth week in a Bloomberg survey.
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With equities faltering, global holdings of gold-backed exchange-traded funds added 67 tons last month and have risen every day since the start of the new year.
“2019 is already getting off to a volatile start and we expect to see the political and economic uncertainty of 2018 continue and deepen,” said Mark O’Byrne, research director at GoldCore Ltd. “We believe risk assets will underperform, while gold outperforms in 2019.”
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Spot gold declined 0.2 percent to $1,291.40 at 11:06 a.m. in London, after earlier touching $1,298.60, the highest since June. In New York, futures on the Comex touched $1,300.40 an ounce.
In addition to roiling equity markets and global economic growth worries, gold has benefited as investors factor in fewer, if any, Federal Reserve interest rate hikes this year. The partial U.S. government shutdown has also spurred a risk-off mood.
“The dollar is showing some signs of weakness especially against the yen, stocks are under pressure, yields are coming down, Fed rate expectations have been coming down as well,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “If that trend continues, then gold will continue to assert its role as a safe haven.”
Among data due for release on Friday are U.S. payrolls figures for December, while Fed Chairman Jerome Powell is due to speak at an event in Atlanta.
Investors will be watching his remarks for his assessment of recent weakness, and the path for monetary policy this year.
