Gold Silver Reports → Gold rebounded the biggest drop in almost seven months as a stock-market rally ran out of steam, while Goldman Sachs Group Inc. said the metal’s surge to a one-year high last week wasn’t justified.
Bullion erased losses made earlier Tuesday as European equities declined for the first time in three days. Gold slumped 2.3 percent yesterday as a gauge of world stocks extended an advance and People’s Bank of China Governor Zhou Xiaochuan expressed faith in the economy, eroding demand for a haven.
The metal is still this year’s best-performing commodity with a gain of 15 percent after China’s deepening slowdown roiled financial markets and the Federal Reserve signaled it will wait longer before raising interest rates. European Central Bank President Mario Draghi on Monday said he was willing to act should more turmoil threaten price stability.
“There is a sense in which people are so worried over the world economy that they believe central bankers will act,” Carole Ferguson, an analyst at SP Angel Corporate Finance LLP in London, said by phone. The weakness in equities in the past few weeks “has added to the worry,” she said.
Bullion for immediate delivery rose 0.5 percent to $1,215.60 an ounce by 11:57 a.m. in London. It touched $1,263.48 on Feb. 11, the highest in a year.
Prices will slump back to $1,100 in three months and $1,000 in 12 months, Goldman analysts including Jeffrey Currie and Max Layton wrote in a report received on Tuesday, reiterating targets in a note last week. It’s “time to sell the fear barometer,” → Neal Bhai Reports