Gold futures were holding up Monday morning despite a sea of red in global equity and commodity markets, drawing a safe-haven bid and also getting a boost from ideas that the freefall in other markets could prompt the Federal Reserve to hold off on tightening U.S. interest rates, analysts said.
However, even though yellow metal hit a fresh six-week high, it also is not racing sharply ahead – as it did on Friday when stocks also tumbled — with traders reporting that some investors are having to sell in order to raise cash to cover losses elsewhere.
China’s main stock index tumbled 8.5% overnight, erasing gains for the year amid continued worries about the health of the world’s second-largest economy. European and other Asian bourses tumbled, and the Dow Jones Industrial Average was down by 581 points in early U.S. trade.
Copper, silver, platinum and palladium – which have far more industrial applications than gold — were all down by 3% or more. Crude oil, copper and aluminum all hit their lowest levels since 2009.
Against this backdrop, as of 9:44 a.m. EDT, Comex December gold was $2.40 higher to $1,162 an ounce.
“Gold on one hand is a place where we go for a safe haven,” said Phil Flynn, senior market analyst with Price Futures Group. “We’ve seen that during the last couple of weeks. That’s definitely giving the gold market a little bit of support.”
Meanwhile, the September U.S. dollar index was down 2.28 points, or 2.4%, to 92.725. Gold often moves inversely to the U.S. currency.
“Gold is mainly benefitting from the U.S. dollar being biased to the downside,” said Bart Melek, director of commodity strategy for TD Securities. “We saw a big swoosh down in the U.S. currency.”
via Kitco
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