Gold price set for biggest monthly gain in a year
San Francisco (Jan 29) Gold edged higher on Friday after US data showed economic growth braked sharply in the fourth quarter and the price of the precious metal was on track for its biggest monthly rise in a year after global economic headwinds hit riskier assets.
The metal has risen more than 5 per cent in January, underpinned by concerns over the world's growth outlook, especially China, which has raised questions about the pace of interest rate rises in the United States.
"Maybe things won't be this bad next month in the wider markets, so it is possible that if ETF flows are subsiding, prices will be lower too," Macquarie analyst Matthew Turner said.
"But one positive lesson we can learn from this month is that gold does still have a safe-haven role and that could stand it in good stead through a testing year to come."
Spot gold was up 0.2 per cent at $US1,116.46 an ounce at 2:51 p.m. EST, while US gold for February delivery settled up 0.1 per cent at $US1,116.40 an ounce.
Global equities jumped and the yen slumped after the Bank of Japan stunned markets by adopting negative interest rates, while hopes the US Federal Reserve will slow the pace of future rate hikes also underpinned stock gains and supported gold prices.
"The probability, according to futures, of a Fed rate hike in March is less than 20 per cent," said George Gero, precious metals strategist for RBC Capital Markets in New York, adding that the weak 10-year US Treasury yield was also supportive to bullion prices.
Gold reached a 12-week high of $US1,127.80 on Wednesday, after the Federal Reserve said it was closely watching the global economy and financial markets. This supported the view that US policymakers may not be able to raise interest rates again as soon as March.
"On the upside, I would look for $US1,150, while there seems to be some support at $US1,100, especially after the more dovish tone of the Fed this week," MKS SA head of trading Afshin Nabavi said.
The market largely shrugged off comment by Dallas Fed President Robert Kaplan, who said the Fed will be patient about policy decisions.
The dollar's ascent accelerated after the release of the US gross domestic product report, which was in line with economists' expectations, but showing a decline.
Spot silver was up 0.4 per cent at $US14.28 an ounce, while spot platinum rose 0.5 per cent to $US864.91 an ounce and palladium gained 1.1 per cent to $US495.19.