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Gold gains for second day as risk aversion fans demand for haven
[SINGAPORE] Gold climbed for a second day as a global selloff in equities deepened, prompting a return to haven assets.
Bullion for immediate delivery rose as much as 0.4 per cent to US$1,093.46 an ounce and traded at US$1,092.37 at 12:31 pm in Singapore, according to Bloomberg generic pricing. The metal gained 1 per cent on Friday and is 3 per cent higher since the start of 2016.
Gold investors have grappled with fluctuations in global equities this year, driven by weakness in China and sinking crude prices. Markets have begun the week gripped by a fresh bout of risk aversion as Asian stocks slipped with energy-linked currencies and Brent crude fell below US$28 a barrel.
The US economy is weaker than expected though not likely headed for recession in 2016, Mohamed A El-Erian, Allianz SE's chief economic adviser, said on Fox News' Sunday Morning Futures.
"Gold is still seen as a safe haven," David Lennox, an analyst at Fat Prophets, said by phone from Sydney. Still, shorter-dated bonds and currencies, especially the US dollar, are attracting more attention as a store of value, he said.
An index of the US currency against 10 of its peers posted a third weekly gain last week, the longest stretch since July. A stronger dollar typically damps gold's appeal.
Investors added to holdings in exchange-traded products for the sixth time in seven days. Assets rose 4.4 metric tons to 1,489.1 tons as of Friday, the highest level since the start of December, data compiled by Bloomberg show.
Bullion of 99.99 per cent purity advanced as much as 0.7 per cent to 232.10 yuan (S$50.83) a gram on the Shanghai Gold Exchange. Spot silver rose 0.4 per cent, while platinum and palladium were little changed.