Gold steadies as United States stocks open higher

Gold fell almost 3 percent on Monday as a rebound in stock markets pointed to a sharper appetite for risk, pulling prices further from last week’s one-year high.

Spot gold fell to a session low of $1,211.05, before paring some losses to trade down 1.9 percent at $1,213.60 by 0753 GMT.

Last week, gold reached the highest price since last summer as looser monetary policy and jittery markets combined to aid the precious metal.

Central banks are driving a lot of the demand for gold as they diversify away from the U.S. dollar.

As the price of gold soared over the Spring Festival break, Yang Meiqi, a 62-year-old retiree living in Shanghai, bought four items of gold jewelry for 70,000 yuan ($10,780) in the hopes that the price for the precious metal would continue to rise. The S&P 500 and Nasdaq also finished well in the green, reflecting the rush out of safe havens back into the markets, reports The Wall Street Journal.

Piling into the gold trader stalls to pick up necklaces, bracelets and ingots – many were calculating further increases were on the way.

“If you look in the rear-view mirror we [the gold sector] probably haven’t been great allocators of shareholder capital”, he said. That could be an opportunity for patient investors to add gold exposure at lower prices and position portfolios for stronger gains in the gold price in the next few years. The bearish call comes just days after yet another U.S. leader put doubts on prices trading at current highs, for long. Gold shares have their place, but tend to underperform gold bullion when equities sell off, and come with company and market risk.

With stocks slipping again on Wednesday, gold was back in favour.

Oil markets weren’t sure what to make off the agreement, but shares eased lower and gold edged higher. “Financial markets have overreacted to the point that current inflation breakevens would require oil prices to keep declining for the next seven years”.

Phillip Futures senior commodities manager Avtar Sandu said: “The United States is going to slow down with their interest rate hikes – the market is expecting the next hike no earlier than December”. That depressed interest in gold as an alternative asset, pulling prices from an earlier high of $1,216.80. That prompted some buyers to cash in gains.

Bullion for immediate delivery rose 0.5 per cent to US$1,215.60 (RM5,049) an ounce by 11:57am in London, according to Bloomberg generic pricing.