Gold rises to its highest in a year on fears of financial uncertainty. Bobbi Rebell reports.
Gold surges to one-year high
Gold grabbed the spotlight on Thursday, surging to a one-year high on a wave of uncertainty in the financial markets. Gold is seen as a safe haven.
Kitco metals Jim Wyckoff:
(SOUNDBITE OVER SKYPE) JIM WYCKOFF, SENIOR TECHNICAL ANALYST, KITCO METALS (ENGLISH) SAYING:
“We saw very sharp losses in the Asian and European stock markets overnight that has prompted a really, a rush into safe haven gold. A fear that gold prices have bottomed out, and they are starting to move higher, and traders might miss the up move so you are also seeing speculative type buying in gold.”
Cautious comments by Fed Chair Janet Yellen also drove demand for the precious metal, because they were taken to mean there would not be near-term interest rate hikes. Lower rates keep down the opportunity cost of holding gold because investors aren’t missing out on higher rates.
Investor interest in gold has been building. Gold-backed exchange-traded funds have seen net inflows since the start of the year.
And gold option volatility surged to the highest in more than a year, as investors become more bullish that prices will extend their rally.
In addition to the deterioration of the stock market, key drivers include buying by central banks, and Chinese investors looking for protection against their weaker currency according to the World Gold Council.