Spot gold jumped 1.3 per cent to $US1,202.81 per ounce overnight, and was on track to post its biggest one-day percentage gain since August 24.
Gold hit its highest in more than a week overnight, vaulting the $US1,200 per ounce mark, as investors sought refuge in the metal after stock markets sold off due to anti-euro comments by an Italian lawmaker.
US gold futures for December delivery settled up $US15.30, or 1.28 per cent, at $US1,207 per ounce.
Gold Prices earlier touched $US1,208.23 an ounce, the highest since September 21.
Stocks slip worldwide, while European assets also dropped after the economics spokesman for Italy’s ruling League party, Claudio Borghi, said most of the country’s problems could be solved by having its own currency.
“The equity market sell-off has unnerved investors and is bringing in some safe-haven bids,”
“Gold still needs to break and hold above major resistance in the $US1,205—$US1,215 range before we can be confident that a low has been formed.”
Analysts noted, however, that gold had not been influenced by the dollar’s broad based rise, as represented by the dollar index.
A rising dollar normally reduces the attractiveness of dollar-priced gold for overseas investors.
“One thing that was interesting today was that the dollar index was over 95 and gold completely ignored that.
The index around this level is a major headwind for gold and when you ignore a headwind it is a bullish signal,” said George Gero, managing director of RBC Wealth Management.
Gold has fallen for the past six months, losing 13 per cent, largely due to dollar strength, with the US currency benefiting from a vibrant US economy, rising US interest rates and fears of a global trade war.
US Federal Reserve Chairman Jerome Powell on Tuesday hailed a “remarkably positive outlook” for the US economy.
The Fed raised rates last week and said it planned four more increases by the end of 2019 and another in 2020, citing steady economic growth and a robust jobs market.
Rising interest rates boost the greenback and increase the opportunity cost of holding gold.
“As long as the US economy continues to grow strongly and the news in terms of trade is generally in favour of the US, gold is going to struggle,” Mitsubishi analyst Jonathan Butler said.
Market participants are now waiting for the US non-farm payrolls data on Friday for further indications on the strength of the economy.
Meanwhile, silver hopped on the gold bandwagon, rising 1.6 per cent to $US14.69 per ounce.
It earlier rose to $US14.91, its highest since August 28.
Platinum rose 0.6 per cent to $US826.49 per ounce, while palladium eased 0.3 per cent to $US1,053.
