Gold Hits 1-Month High as Investors Seek Safety
San Franciso (Jan 12) Gold prices rose to their highest level in a month Monday, as investors sought shelter amid concerns of whether the sharp drop in oil prices would harm the global economy.
Gold for February delivery, the most actively traded contract, was recently up $6.50, or 0.5%, at $1,223.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices hit $1,231.30 a troy ounce earlier in the session, the highest level since Dec. 10.
Some investors are concerned the recent tumble in oil prices will hurt energy-exporting countries and damage the health of the global economy. U.S. oil prices sank 3.8% Monday to $46.55 a barrel, a five-and-a-half-year low. Data from the U.S. released Friday showed hourly wages declined last month and more Americans dropped out of the labor force, even though overall jobs increased at a brisk pace, adding to investors’ list of concerns.
Investors are also watching the political situation in Greece, where an antiausterity opposition party continues to hold a narrow lead in the polls just two weeks ahead of national elections. There has been speculation that the country would exit the eurozone if the opposition party wins, although the leader of the party said Sunday that it would keep Greece in the currency union.
“The global markets are closely intertwined, and investors in the European theater are aggressively reallocating capital, with flows finding their way into U.S. fixed income and gold,” said Peter Hug, director of trading at Kitco Metals, in a note to clients. “Unless the equity market in the U.S. moves higher, and the energy sector stabilizes, (precious) metals continue to show promise.”
Other precious metals rose in gold’s wake. Silver for March delivery was recently up 0.9% to $16.580 a troy ounce. Platinum rose by 0.4% to $1,235.40 a troy ounce, while palladium was up 0.5% to $804.55 a troy ounce.