• Saturday, June 22, 2024
businessday logo

BusinessDay

Gold holds steady amid shaky global outlook

Top 10 countries with largest gold reserves

Gold steadied near $1 280 an ounce on Monday, after posting its biggest monthly gain in three years, as a shaky outlook for the global economy preserved bullion’s safe-haven draw.

A pair of surveys showed China’s factory sector struggled in January, adding to worries over the global outlook after US gross domestic product marked a sharp slowdown in the fourth quarter.

“Overall there’s a sense that the global economy is not doing well and that has boosted the safe-haven appeal of gold. In the short term, we should see gold stay above $1 250,” said Howie Lee, investment analyst at Phillip Futures.

Spot gold was dipped 0.3 percent to $1 279.50 an ounce by 08:59 after rising 2 percent on Friday. It ended January with a gain of 8.4 percent, its largest monthly increase since January 2012.

Read also: Helping kids turn making money into fun experience

But Lee said the metal’s steep gains in the previous session may have been “overdone.”

“A single disappointing fourth quarter gross domestic product (GDP) data is unlikely to sway the Fed’s decision drastically,” said Lee, who thinks that the US central bank is still well on track to raise interest rates by June amid signs of a generally strengthening economy.

US gold for April delivery was little changed at $1 280.10 an ounce. US economic growth slowed to a 2.6 percent annual pace from a 5 percent rate in the third quarter as weak business spending and a wider trade deficit offset the fastest pace of consumer spending since 2006.

China’s factory sector unexpectedly shrank for the first time in nearly 2½ years in January and firms see more gloom ahead, official data showed on Sunday. A separate private survey released on Monday showed Chinese manufacturing activity contracted for a second straight month in January.

“With the Chinese economy facing headwinds from weaker European demand and disinflation, we see rising pressure for more stimulus measures, such as liquidity injections, interest rate cuts or RRR (reserve requirement ratio) cuts,” Mizuho Bank said in a note. Gold’s firm tone was also backed by strong inflows into exchange-traded funds.

Holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, stood at 24.4 million ounces as of Thursday, the highest since mid-October.