1. Gold holds gains from two-day rally on safe-haven demand

Gold holds gains from two-day rally on safe-haven demand

Gold retained gains from a two-day rally on Wednesday, buoyed as markets shifted away from risk amid escalating tensions in the Middle East, fears of a slowdown in China and a slide in global equities.

By: | Singapore | Published: January 6, 2016 9:15 AM
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Gold retained gains from a two-day rally on Wednesday, buoyed as markets shifted away from risk amid escalating tensions in the Middle East, fears of a slowdown in China and a slide in global equities. (Reuters)

Gold retained gains from a two-day rally on Wednesday, buoyed as markets shifted away from risk amid escalating tensions in the Middle East, fears of a slowdown in China and a slide in global equities.

FUNDAMENTALS

* Spot gold was little changed at $1,077.80 an ounce by 0046 GMT, after gaining 1.6 percent in the last two sessions. It reached a four-week high of $1,083.30 on Monday.

* The metal’s safe-haven appeal has shone through early in the year as relations between Saudi Arabia and Iran collapsed over the weekend after the Kingdom’s execution of a Shi’ite cleric, a prominent critic of Saudi policy, set off a storm of protests in Tehran.

* A rout in the equity market also prompted investors to channel money towards gold.

* Global equity markets were flat on Tuesday after their worst January kick-off in years as concerns about the Chinese economy weighed. On Monday, Chinese shares slumped 7 percent, triggering a domestic trading halt and a sharp sell-off in U.S. and European markets.

* Bullion is often seen as a alternative investment during times of geopolitical and financial uncertainty, though safe-haven rallies tend to be short-lived.

* Gold slid 10 percent last year on fears higher U.S. rates would lower demand for the non-interest-paying asset, while boosting the dollar. A stronger greenback makes dollar-denominated gold costlier for holders of other currencies.

* The Federal Reserve raised U.S. rates for the first time in nearly a decade last month. It is expected to hike rates further this year.

* The U.S. central bank’s Federal Open Market Committee will release the minutes of its December policy meeting later on Wednesday. Bullion traders will be eyeing the minutes for clues about the outlook for the Fed’s rate hike path.

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