Gold price extends gains after biggest monthly rise in 4 years
London (Mar 1) Gold rose on Tuesday, building on its biggest monthly gain in four years, as concerns over the global economy after downbeat data from China and the United States fuelled interest in the metal as a safe store of value.
Further inflows into gold-backed exchange-traded funds indicated buoyant investor appetite for gold. The largest, New York-listed SPDR Gold Shares, saw inflows of nearly 15 tonnes on Monday, taking holdings to their highest since 2014.
Spot gold was up 0.6 percent at $1,244.90 an ounce at 1230 GMT, while U.S. gold futures for April delivery were up 1 percent at $1,246.30.
"From our perspective, it's really warranted to reconsider gold's role as insurance in a portfolio," Julius Baer analyst Carsten Menke said.
"The risks of adverse market conditions have really risen, whether it's a China hard landing, an emerging market solvency crisis, or maybe also a U.S. recession."
Data on Tuesday showed Chinese manufacturing sector activity shrank more sharply than expected in February, suggesting Beijing will have to ramp up stimulus to avoid a deeper economic slowdown. Overnight the Chinese central bank moved to resume its easing cycle.
Downbeat data on Monday revived concerns about the strength of the U.S. economy. Contracts to buy previously owned homes fell to their lowest in a year in January, while the Chicago Purchasing Managers Index, a leading indicator of the U.S. economy, contracted last month.
Although global economic concerns have prompted investors to channel money into gold, rising prices have muted some physical demand in the major Asian gold consuming regions.
Gold's rally on Monday prompted the Chinese, the top consumers of gold, to sell the metal on Tuesday, one Hong Kong-based trader said.
"They were buyers when prices were around $1,230 but the rally has put an end to that," he said.
India, the second largest consumer, has reintroduced a local sales tax on gold jewellery, in a move officials hope will dampen demand. Indian jewellers will go on indefinite strike from Tuesday in protest.
Despite the taxes, India's gold imports surged 62 percent in January to 93.3 tonnes, a news agency reported on Tuesday.
Among other precious metals, silver was up 1 percent at $15.03 an ounce, while platinum was up 1.3 percent at $942.09 an ounce and palladium was up 3.9 percent at $506.22 an ounce.
Palladium is rallying after underperforming other precious metals last month, easing 1.2 percent while gold climbed 10.7 percent, its biggest monthly rise since January 2012.