Gold near highest in over two months as equity plunge boosts safe-haven appeal

Friday,   12-Oct-2018   09:24 AM (IST)

Gold edged down on Friday but held near an over two-month high hit in the previous session, when prices surged over 2 percent as a rout in global stock markets boosted the metal’s safe-haven appeal. Spot gold was down 0.2 percent at $1,221.06 an ounce at 1255 GMT. On Thursday, it jumped about 2.5 percent after marking its highest since July 31 at $1,226.27. That was also the metal’s best one-day percentage gain since June 2016. U.S. gold futures were down 0.3 percent at $1,224.50 an ounce. Asian shares held steady on Friday after a nine-day losing streak, but sentiment was frail after Wall Street shares crumbled and expectations of market volatility shot up to an eight-month high. Worries about the economic impact of the Sino-U.S. trade war, a spike in U.S. bond yields this week and caution ahead of earnings seasons have all been cited as potential reasons behind the selloff, the biggest market rout since February. The dollar fell to a near two-week low on Thursday against a basket of currencies as traders pared greenback holdings on lower U.S. Treasury yields and further equity losses on Wall Street. The stock sell-off, rising trade tension with China, slower global growth and verbal pressure from the White House are unlikely to dent the U.S. Federal Reserve’s rate hike plans in an economy performing in line with the central bank’s forecasts. U.S. President Donald Trump launched a second day of criticism against the Fed on Thursday, calling its interest rate increases a “ridiculous” policy that was making it more expensive for his administration to finance its escalating deficits. U.S. consumer prices rose less than expected in September, held back by a slower increase in the cost of rent and falling energy prices, as underlying inflation pressures appeared to cool slightly. Investors searching for perpetrators and victims in this week’s U.S. stock market selloff pointed to a familiar source: number-crunching fund managers and machines. China’s latest attempts at restricting outward investment by its residents show just how nervous policymakers in the world’s second largest economy are about possible capital flight spurred by a broadening Sino-U.S. trade war. International Monetary Fund Managing Director Christine Lagarde on Thursday warned countries against engaging in trade and currency wars that hurt global growth and imperil “innocent bystanders.”