Gold acts as safe haven as global equities plummet

Otmane El Rhazi from The Bullion Desk.

Gold prices advanced to fresh highs as the three major equity markets spiraled downward, attracting safe haven demand for the yellow-metal.

Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up $2.70 or 0.2 percent to $1,155.90 per ounce, near six week highs for the precious metal. Trade has ranged from $1,148.50 to $1,167.90.

Overnight, the Shanghai Composite Index fell 4.3 percent to 3,507.74, while Germany’s DAX and France’s CAC-40 were each down 1.3 percent respectively.

Turning to the US, the Dow Jones industrial average and S&P were each down 2.1 percent, while the dollar was 0.6 percent softer $1.1305 against the euro.

Gold typically acts as a safe haven – or a hedge – for investors during volatile periods or uncertainty in global markets.

Inflows in gold ETF holdings accelerated – holdings in funds tracked by FastMarkets have increased to 1,526.70 tonnes.

“Those who began singing the swan song for gold around four weeks ago are doubtless rubbing their eyes in amazement now,” Commerzbank said. “It would appear that the precious metal is not quite so useless after all when things get turbulent on the markets. After all, equity markets are now nose-diving not only in China, but worldwide.”

In news, rancorous disputes in Greece over an additional bailout and further austerity measures has forced Greek Prime Minister Alexis Tsipras to resign as he called for a snap election next month.

In China, Caixin – previously HSBC – flash manufacturing PMI undershot expectations at 47.1 – below the 50 contraction level. It was the lowest reading since March 2009 and follows the previous poor reading of 48.2.

The economic data is focused on flash PMI numbers today – already released EU flash manufacturing and flash service PMI data was as expected at 52.4 and 54.3, respectively.

The US also has flash manufacturing PMI scheduled.

As for the other precious metals, Comex silver for September delivery was last down 9.7 cents at $15.420 per ounce. Trade has ranged from $15.300 to $15.715.

Platinum for October delivery on the Nymex declined $4.70 to $1,030.20 per ounce, while the most-actively traded palladium contract was at $606.10 per ounce, down $17.15.

(Editing by Tom Jennemann)

The post Gold acts as safe haven as global equities plummet appeared first on The Bullion Desk.