Gold rises as equity investors waver
New York (Jan 14) Gold surged higher as equity investors sought cover as the World Bank downgraded its forecast for global growth.
The metal sprinted past its previous sticking lpoint of US$1,240 as the Bank forecast 3% global growth this year against 3.4% previously.
Gold was also boosted by clearance for the ECB to launch a quantitative easing programme, despite objections from Germany, which says the ECB is exceeding its powers.
Weaker than expected US retail sales data in December also boosted gold, with shop takings disappointing even allowing for the impact of weaker petrol prices.
Commerzbank said gold is living up to its safe haven status is a world where external risks are growing.
“The opportunity costs of holding gold are also falling further thanks to the ongoing decline in the yields on 10-year US Treasuries, which have reached their lowest level since May 2013.”
Wall Street economist Marc Faber meanwhile predicted a strong year for gold in his Global Boom Doom report, with gains of as much as 30% possible as market confidence in central bank around the world erodes.
In the current uncertainty though, for every bullish upgrade there is usually a downgrade.
Earlier in the week Canadian bank BMO trimmed its price target for 2015 to an average US$1,170 per ounce, a US$20 reduction on its previous forecast.
Shortly after US markets opened spot gold was US$10 higher at US$1,240, silver a touch lower at US$16.98 and platinum up US$3 at US$1,239.
Source: ProActiveInvestors
