Gold price pushes higher as stocks tumble

London (Feb 9)  Gold prices were slightly higher on the London spot market Tuesday, as volatility on financial markets spurred demand for safe-haven assets.

Spot gold was up 0.1% at $1,190.10 a troy ounce, having hit its highest level in eight months in the previous session, trading around $1,200 an ounce.

Global stocks continued to tumble Tuesday, with investors fretting that weak oil prices are a sign of faltering economic growth which poses particular dangers for the banking sector. Japanese equities slid over 5%, while markets in Europe and the U.S. extended declines. Markets in China were closed for the weeklong Lunar New Year holiday.

With investors increasingly averse to taking on riskier assets, appetite for gold has picked up. The metal is considered an effective hedge against risk as a store of long-term value.

“Safe-haven assets are shining...[as] global financial risk remains high due to the energy sector,” said Nour Al-Hammoury, chief market strategist at Abu Dhabi-based ADS Securities, in a client note.

Gold prices are likely to remain volatile in the near term, but in the longer run, risk aversion should underpin bullish sentiment in the bullion market, analysts said.

“With market volatility being at such extreme levels and confidence in the global economy being very low at present, emerging suspicions are growing that 2016 could defy expectations and become a positive year for the metal,” said Jameel Ahmad, chief market analyst at FXTM brokerage.

Among the other precious metals, spot silver was up 0.3% at $15.344 an ounce, spot platinum was up 0.3% at $925.92 an ounce and spot palladium was up 0.1% at $514.20 an ounce.

Source: MarketWatch