eBusiness Weekly
Gold keeps its glow into 2019 as growth concerns spur demand for safe haven
Gold has closed out 2018 on a strong note, its haven demand reinvigorated by volatile trading in global equities, rising concern about the economic outlook and a drawn-out government shutdown in the US.
Spot bullion is holding near a six-month high after topping $US1280 an ounce, and the metal was set for the best monthly gain in almost two years. December’s rally has pared an annual decline, the first full—year loss since 2015.
Gold gained ground this quarter as world equities plunged and doubts stacked up about the pace of economic growth in 2019. A weakening dollar in December aided the rally amid expectations the Federal Reserve will dial back the pace of rate increases this year. That’s also helped to boost holdings in gold-backed exchange—traded funds.
“For gold prices, I think there is upside to be seen in 2019,” Jingyi Pan, market strategist at IG Asia Pte. told Bloomberg TV on Monday, citing prospects for fewer tightening moves from the US central bank.
“It does look like one where we will see a slackening of expectations in Fed hikes.”
Spot gold hit $US1284.15/oz on Monday, the highest price since mid-June, and it’s up 4.9 per cent this month, according to Bloomberg generic pricing.
Prices held their ground even after President Donald Trump struck an upbeat tone on his trade dispute with China, one of the lingering threats to growth going into a new year. Trump and Chinese counterpart Xi Jinping spoke at length by phone Saturday, with each expressing satisfaction.
A bullish breakout will take prices toward $US1309/oz in the current term, according to Benjamin Lu, an analyst at Phillip Futures. Haven demand will “remain vigorous” in the first quarter on economic and geopolitical concerns, he said.
Adding to the bulls’ case, data showed manufacturing in Asia’s top economy shrank. China’s Purchasing Managers Index fell to 49.4 in December, lower than expected and below the level of 50 that signals contraction.
Among other precious metals, silver for immediate delivery was little changed at $US15.3876 an ounce, after reaching the highest level since August. A rally of more than 8 per cent this month has eroded an annual drop.
Platinum is set for a full—year decline, while palladium is poised for its third consecutive annual increase and traded on Monday just below a record hit earlier this month.
