Gold prices rose more than 1% on Thursday, regaining the psychologically important $1,200 level as a rout in global stock markets spurred by fears over rising bond yields, slowing global growth and trade tensions bolstered safe haven demand.
December gold futures were up $13.90 or 1.16% to $1,207.30 by 07:45 AM ET (11:45 GMT) on the Comex division of the New York Mercantile Exchange. Prices settled at $1,189.30 on Wednesday.
Safe haven demand for the precious metal was boosted amid steep declines in global stock markets as investors dumped assets perceived as riskier.
The selloff was triggered by a combination of concerns over the impact of rising bond yields and fears that trade conflicts are starting to have a serious impact on the global economy.
The declines came despite a rally in U.S. Treasuries. The yield on the benchmark 10-year note, which moves in the opposite direction to price, moved higher as investors sought safety from the global equities sell-off.
Treasury yields started to climb last week amid expectations for a faster than expected pace of rate hikes from the Federal Reserve as the outlook for the U.S. economy remains strong.
Gold received an additional boost from the broadly weaker dollar, with the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, down 0.39% to a one-and-a-half week low of 94.86.
A weaker dollar can make dollar denominated assets, like gold, less expensive to potential buyers holding other currencies.
Expectations for rising interest rates look likely to remain a headwind for gold prices. Interest rate increases and higher U.S. bond yields dampen appeal for gold, which offers no yield. They also tend to boost the dollar.
Elsewhere in metals trading, December silver advanced 0.59% to $14.41 a troy ounce, while January platinum was trading at $829.00, up 0.18% for the day.