Gold climbs as investors seek refuge from volatility

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“What has happened now is that all the milling plants have been registered and all of them are now required to send their gold to Fidelity Refineries,”

LONDON — Gold hit a 12-week high yesterday as investors sought refuge from volatility in the wider markets, with a slide in crude oil prices to a near six-year low fuelling turbulence in stock markets and currencies.

It peaked at $1 243,60, the highest since mid October, before retreating as European stocks turned higher and the dollar recovered from an early low. It remained elevated, however, as oil prices stayed under the cosh.

Spot gold was up 0,4% at $1 238,11 an ounce at 10.22am GMT, while US gold futures for February delivery were up $6/oz at $1 238,80.

Gold has risen nearly 5% this month as equities, which were boosted last year by hopes that the US economy was on the road to recovery, have come under pressure. Strength in stocks helped push gold prices down 1,5% in 2014.

“There is an element of beginning-of-the-year exuberance in gold, carrying over from the relative weakness in the equity markets at the moment,” Mitsubishi analyst Jonathan Butler said.

“The fact that gold can rally despite the dollar being relatively strong says something of the uncertainty regarding the US economy,” he said.

“There’s a question over whether we’ll revert to gold as a safe haven, as we’ve seen in recent days, or if US growth is going to pull through and ultimately drive the dollar higher, with negative implications for gold.”

European stocks yesterday turned marginally higher, having fallen in earlier trade after a fresh drop in oil prices hit energy stocks. Brent crude oil futures fell 4% to their lowest in almost six years.

The dollar index crept up after the US unit earlier skidded to its lowest level against the yen in a month, as Treasury yields fell on increased demand for safe-haven assets against a backdrop of plunging oil prices.

Silver was up 2% at $16,85/oz.

Platinum returned to parity with gold after spending most of the last 18 months at a premium to the metal. Spot platinum was flat at $1 237,30/oz, while spot palladium was up 0,2% at $807,90/oz.

“Gold has been leading the move higher so far in 2015, and the rest of the precious metals have mostly been followers,” UBS said in a note yesterday.

– Reuters