The Gold futures continue growing trend and reached its highest level since October. The rise was helped by demand for a safe place for investment induced by the continuing decline in oil prices and weakness in some stock markets. The Asian stocks were mainly of defensive positions in trading on Tuesday as the continuing decline in crude oil prices to around 45 USD per barrel caused investors to be more attentive to risk assets. The Brent crude oil and US benchmark WTI fell to their lowest levels for nearly six years. The weaker oil prices tend to negatively affect the price of gold, as they reduce the need for the precious metal as a protection against oil-led inflation, but because the stock markets are affected by the decline in oil prices and increased fears economic impact of this, the demand for protection boost metal.
The gold is usually seen as an alternative investment to riskier assets such as shares rose as investors began to pour money into it, along with other safe havens such as the JPY. The spots on gold amounted to 1,238.81 USD per ounce, which is the highest level since 23rd October 2014, and traded 0.3% growth to 1,237.15 USD per ounce. The US gold futures reached 1,242 USD, also the highest level since October.
The gold buying area around 1,240 USD could lead to a sharp increase to mid 40 USD if metal spent some time today consolidating around 1238-39 USD, according to commodity trade experts. Other traders said that the weakness of the dollar and purchases of real market in China also support the price of the metal. However, many are not convinced that gold will be able to keep their profits during the year. Barclays expects gold to exceed the limit of 1,130 dollars this year, the lowest level of the metal in 2010.
Good economic data from the US over the past few months led many in the market expect the US Federal Reserve (Fed) to increase the base rate in the country for the first time since 2006. The US economy is recovering faster than expected, which probably puts the Fed under pressure to raise interest rates by mid-year, said Monday the Fed chairman in Atlanta Dennis Lockhart. The higher interest rates would reduce the demand for gold, which is an asset without return, and will boost the USD.