Gold Prices Rise as Investors Seek Haven on Disappointing China Data
London (Mar 8) Gold prices were higher on the London spot market as unexpectedly weak Chinese trade data saw investors seek out safe-haven assets.
Spot gold was trading up 0.5% at $1,272.95 a troy ounce in midmorning trade, having hit a two-day high earlier in the session at $1,276.38 a troy ounce.
Exports in the world’s second-biggest economy slid 25.4% in February compared with a year earlier, the eighth straight monthly drop, after dropping 11.2% in January, data from the General Administration of Customs showed Tuesday.
“China is the story again,” said Nour Al-Hammoury, chief market strategist at ADS Securities. The data “increases the chances for further measures [or] intervention by the PBOC [People’s Bank of China]. But so far this morning, Asian equities are lower and safe haven assets remains on the rise.”
Gold has gained 20% in value since the start of the year, predominantly on market volatility. The metal is considered a safe hedge against risk and attracts buyers in times of heightened instability.
Looking ahead, the rally in gold could fizzle out as stronger U.S. data is expected to send the dollar higher. “This in turn will likely put downward pressure on gold prices towards our near-term target of $1,100/oz,” said analysts at Goldman Sachs Group Inc.
Among the other precious metals, spot silver was up 0.2% at $15.648 an ounce, spot platinum was up 0.6% at $1,003.11 an ounce and spot palladium was down 1.3% at $569.85 an ounce.