London: Gold rallied toward $1,100 an ounce as equities dropped, investor holdings climbed to the highest level in two months and Citigroup Inc. said that bullion’s role as a haven asset was now back in vogue.
Bullion for immediate delivery advanced as much as 0.7 per cent to $1,095.07 an ounce and traded at $1,093.59 at 3:38pm in Singapore, according to Bloomberg generic pricing.
The tumultuous start to the year on global financial markets has led investors to seek more bullion, boosting prices 3.1 per cent. Asian stocks fell to a three-year low on Wednesday after crude sank below $28 a barrel and the International Monetary Fund cut its world growth outlook. Citigroup upgraded its gold price forecast for 2016, while cutting the bank’s outlook for crude oil and base metals as economic growth cools.
“Gold’s safe-haven rationale is back in vogue, for the time being,” Citigroup analysts including Aakash Doshi wrote in a report received on Wednesday, raising the 2016 forecast 7.5 per cent to $1,070 an ounce. “We expect ongoing global macro concerns to lend support this quarter.”
Holdings in gold-backed exchange-traded products climbed for the seventh time in eight sessions. Assets surged 22.7 metric tons to 1,511.8 tons as of Tuesday, the highest level since Nov. 6, data compiled by Bloomberg show.
‘Bit Nervous’
“People are still a bit nervous, although I don’t think they should be because I feel that this commodity cycle is starting to position itself quite positively,” Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney, said by phone.
Bullion of 99.99 per cent purity rose 0.4 per cent to 232.30 yuan a gram ($1,097.76 an ounce) on the Shanghai Gold Exchange. Spot silver added 0.5 per cent, while palladium lost 0.1 per cent and platinum dropped 0.6 per cent.
Gold Rate: To keep up to date with gold prices, go to our gold rate page.
Currency Rate: To keep up to date with latest exchange rates, go to our currencies page.
