The gold price struck its highest since October 2014 on the prospect of a delayed interest-rate rise in the US and safe-haven demand.
Spot gold was last at $1,237.90/1,238.70 per ounce, up $7.70, after earlier hitting a three-month high at $1,244.50.
A slump in US treasury yields fuelled the move, market observers said – the yield on ten-year US treasuries fell below 1.9 percent to its lowest since May 2013.
Oil prices have also continued to decline after the energy minister at OPEC producer UAE backed the decision late in 2014 not to cut production from 30 million barrels per day. Brent crude fell to a near-six-year low this morning at $45.20 per barrel.
“Gold and silver are in increased demand as safe havens at present in view of the slump in oil prices and the losses suffered by base metals,” Commerzbank said in a note. “Some market players appear to be assuming that the US Federal Reserve will increase interest rates later and to a lesser extent than previously anticipated as a result of the lower inflation due to oil prices.”
The prospect of a near-term US rate rise appears less likely given concerns about wages highlighted in last Friday’s jobs report and world growth concerns. Still, Commerzbank remain confident that the Fed will start lifting rates from June.
Gold prices are also benefitting from increased speculation that ECB president Mario Draghi will announce at next week’s meeting a programme of broad-based government bond purchases given continued inflation woes in the eurozone, with the euro falling to a near-nine year low against the dollar at 1.1790.
Should the positive momentum continue, gold will look to challenge heavy resistance at $1,250, “which will be a psychological resistance number and should see some selling ahead of it”, Marex Spectron’s David Govett said.
“Gold has now gone up in a fairly straight line since the end of the year and the market is getting itself long again. We will need a pullback at some stage and if $1,250 fails, we may see that in the next day or two,” he added.
In data today, the Chinese trade balance was broadly in line with expectations at $49.6 billion against a forecast $48.9 billion but down from a previous $54.5 billion.
Elsewhere, the German WPI at -1.0 percent was short of expectations, while Italian industrial production at 0.3 percent beat the consensus forecast. In the UK, consumer inflation fell to 0.5 percent in December from 1.0 percent in November.
The NFIB small business index, JOLTS job openings, the federal budget balance and economic optimism figures are due from the US later.
In the other metals, silver at $16.88/16.94 per ounce was up 36 cents after earlier hitting a one-month high at $17.06. The metal is up seven percent for the year.
The PGMS continue to benefit from strong US and China vehicle sales data – platinum rose $9 to $1,243/1,249 per ounce after hitting a one-month high at $1,247, while palladium was last up $7 at $809/814.
(Editing by Mark Shaw)
The post Gold price hits 1-mth high on prospect of delayed US rate rise appeared first on The Bullion Desk.
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