Gold price jumps 1% as weak oil, equities boost safe-haven demand

London (Apr 5)  Gold futures pushed higher in European trade on Tuesday, as retreating oil prices and steep declines in global equity markets underpinned demand for assets perceived as safer.

Gold for June delivery on the Comex division of the New York Mercantile Exchange rallied $11.50, or 0.94%, to trade at $1,230.80 a troy ounce by 07:55GMT, or 3:55AM ET.

Market sentiment was hit as fresh falls in oil prices, which slid to four-week lows, and a selloff in global equities added to fears over the outlook for global economic growth.

On Monday, gold retreated $4.20, or 0.34%, amid mixed messages from Federal Reserve policymakers on the outlook for U.S. interest rate rises.

Boston Federal Reserve President Eric Rosengren was the latest to fly into the hawkish zone on Monday, calling it "surprising" that futures markets currently price in just one or even no rate hikes this year, which he said could prove "too pessimistic."

Meanwhile, Minneapolis Fed President Neel Kashkari said on Monday he is "comfortable" with the current stance of U.S. monetary policy, and expects "moderate" economic growth ahead.

On Tuesday, Chicago Fed President Charles Evans repeated his call for just two U.S. interest-rate hikes this year.

While the Fed's projections point to two rate hikes this year, traders expect only one, according to the CME Group's (NASDAQ:CME) FedWatch program.

Fed Chair Janet Yellen said last week that the U.S. central bank will proceed cautiously in raising interest rates due to external risks such as slower global growth.

A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.

Prices of the yellow metal are up nearly 14% so far this year as expectations faded that the Fed would move to normalize interest rates due to fears over a China-led global economic slowdown.

Gold is sensitive to moves in U.S. rates, as a rise would lift the opportunity cost of holding non-yielding assets such as bullion.

Investors will be looking ahead to U.S. data on service sector activity due later in the session for further indications on the strength of the economy. Wednesday’s minutes of the Federal Reserve’s latest policy meeting are also in focus, as market players search for fresh clues on the timing of the next U.S. rate hike.

Also on the Comex, silver futures for May delivery tacked on 13.6 cents, or 0.91%, to trade at $15.08 a troy ounce during morning hours in London, while copper futures inched up 0.4 cents, or 0.16%, to $2.144 a pound.