Gold Climbs to 5-Month High as Growth Outlook Spurs Haven Demand

By Laura Clarke  

Gold advanced to the highest in almost five months as precious metals climbed on demand for a haven amid concerns global economic growth is slowing.
The International Monetary Fund made the steepest cut to its global growth forecast in three years in an outlook released late Monday in Washington. It said slowing growth almost everywhere except the U.S. will more than offset the boost to expansion from the slump in oil prices.
Bullion jumped last week by the most since August 2013 after the Swiss National Bank ended the franc’s cap against the euro and deepened negative interest rates, roiling markets. The European Central Bank may announce asset purchases on Jan. 22 before a Greek election three days later that’s spurred concern the country may exit the currency bloc.
“All these factors are coming together and leading to safe-haven buying in gold,” Jonathan Butler, a precious metals strategist at Mitsubishi Corp said by phone. “There’s an element of apprehension about what the ECB will come up with. No one wants to be on
the wrong side of it when it eventually announces quantitative easing.”
Bullion for immediate delivery rose as much as 1.5 percent to $1,294.26 an ounce, the highest since Aug. 28, and was at $1,292.44 by 10:13 a.m. in London, according to Bloomberg generic pricing. Gold for February delivery climbed 1.2 percent to $1,292.50 on the Comex.
Floor trading in New York was shut Monday for Martin Luther King Day and transactions will be booked today for settlement purposes. Futures trading volumes were triple the average for the time of day over the past 100 days.

Federal Reserve

The dollar has rallied as the Federal Reserve prepares to raise interest rates as the country’s economy improves. Rising rates cut gold’s allure because bullion generally offers investors returns only through price gains.
“The macro conditions remain favorable for gold despite the strength of the dollar,” Mitsubishi’s Butler said. “That’s been driven by a fear trade and hedging against further weakness in the euro and wider economic uncertainty.”
Silver for immediate delivery rose as much as 1.9 percent to $18.028 an ounce in London, the highest since Sept. 19, and was last at $17.9445. Palladium gained 1.1 percent to $766.90 an ounce and platinum added 0.2 percent to $1,268.50 an ounce, after touching the highest since Oct. 29.