Signup for our free newsletter:

Gold Remains Safe Haven

Written By Brian Hicks

Posted December 4, 2012

Recent Chinese data indicated an uptick in growth, and gold rose accordingly on Monday.

The euro delivered a solid performance too, reaching a six-week high on a mix of the Chinese data and a slowdown in European contractions.

Spot gold rose 0.3 percent to $1,720.06/ounce, after decreasing by the same amount earlier in November. U.S. gold rose to $1,721.20, a gain of 0.5 percent.

Reuters reports:

“The Chinese data plus rising equities are boosting risk sentiment and that is lifting gold,” Andrey Kryuchenkov, analyst with VTB Capital, said.

“Gold is going to keep pushing a little higher while we wait for the opening of U.S. equities and U.S. PMI data, with support at $1,712.”

The Purchasing Managers Index, or PMI, for November established that factory activity declines for European industries have slowed; data for the U.S. was released around noon Monday. Overall, oil and commodities also rose slightly.

As details emerged regarding Greek debt buybacks, demand for more risky assets and Greek government bond prices shot up.

Meanwhile, uncertainty regarding the U.S. economy—particularly the fiscal cliff—keeps gold an attractive safe-haven bet.

And India, the world’s biggest bullion consumer, made major gold purchases to take advantage of its low cost. Gold-backed ETF holdings were at a record high.

Underscoring the domestic economic turmoil, sales of American Eagle gold coins were higher last month than any November in over a decade.

Gold dropped again on Tuesday morning. Spot prices fell 0.67 percent to $1,703.31.