Gold price hits one month high on safe haven demand

The price of gold rose to a one month high earlier in today’s trading session but has since then given back most of its gains. Bullion advanced due to weakness in the US dollar and on a further decline in oil prices which sparked safe-haven bids for the precious metal.

Gold for immediate delivery was virtually flat, up less than 0.1 percent at $1222.77 as of 08:44 GMT, and was trading 2.64 percent above its 50-day simple moving average of $1,191.23. The precious metal rose as high as $1,231.08 earlier during the session, the strongest level since 11 December.

According to FastMarkets analyst William Adams: “Precious metals seem to be benefitting from the weaker dollar and the pull back in equities, with gold prices stretching to the upside and closing in on important resistance at $1,238.60.”

The dollar retreated from its nine-year high after Friday’s US employment situation report for December showed an unexpected 0.2 percent drop in hourly wages that overshadowed the 252,000 jobs the economy added last month. The release supported expectations that the Fed would be patient in raising interest rates, which boosted zero-yielding assets such as gold.

Bloomberg quoted a note from Huang Wei, an analyst at Huatai Great Wall Futures Co., as saying:

On the COMEX in New York, gold for February delivery had risen 20 cents to $1,223.2 as of 08:58 GMT. According to some analysts, the recent collapse in oil prices has had a positive impact on bullion as equity markets take a hit from persistent weakness in crude, fuelling safe haven demand.

Reuters cited HSBC analyst James Steel as saying:

The price of Brent hit its lowest level in five-and-a-half years earlier today.