Gold climbs to highest in eight-and-a-half months

It has risen about 14 per cent so far this year on expectations that the Fed will slow down its interest rate increases amid global economic volatility.

Gold’s explosive start to 2016 has lifted prices to the highest level in a year as investors flee a bear market in global stocks, a weakening dollar and the fallout from the spread of negative interest rates. It was on track for its biggest daily rise since January 2009. “We recommend clients add gold to their portfolios as insurance, if things turn out really bad, there will be much more upside”, said Julius Baer analyst Carsten Menke. “Investors are returning to gold as a core diversifier and safe haven investment”, James Butterfill, head of research at ETF Securities, said in a note.

The rally extended after US Federal Reserve Chair Janet Yellen, during her biannual testimony to the US Senate Banking Committee, said she will not take the consideration of negative rates off the table.

Jeffrey Gundlach, the co-founder and chief executive officer of DoubleLine Capital, said on Thursday that gold prices are likely to reach $1,400 an ounce as investors lose faith in central banks.

“Gold has been in reverse correlation to stock markets so we anticipate further stock declines with further increased investment in gold”.

Gold prices swept above $1,200 on Thursday, bolstered by a combination of “catch-up” buying in Asia – some markets reopened fully after the Lunar New Year – and technical buy-stops.

Assets in SPDR Gold Trust, the world’s top gold-backed exchange-traded fund, rose 1.99 percent to 716.01 tonnes on Thursday, the biggest inflow in two months. Traders are in the process of rushing to the precious metal because of it’s safe haven properties.

Photo Credit:Reuters/Shamil Zhumatov* U.S. 10-year yields hit lowest in nearly three years * European shares and dollar dip (Updates throughout, changes dateline from SINGAPORE) By Clara Denina LONDON, Feb 11 (Reuters) – Gold climbed to its highest in almost nine months on Thursday as the dollar, U.S. Treasury yields and equity markets dipped on bets that the Federal Reserve could find it hard to raise U.S. interest rates this year. Silver rose 2.9 percent to $15.72 an ounce, its highest since November 2015.

Gold for April delivery on the Comex division of the New York Mercantile Exchange rose to an intraday peak of $1,241.90 a troy ounce, a level not seen since February 2015, before falling back to trade at $1,234.40 by 13:40GMT, or 8:40AM ET, up $39.80, or 3.33%.