Gold hovered above $1,270 an ounce on Tuesday as a wobbly outlook for the global economy burnished bullion’s appeal as a safe-haven, with holdings at the top gold fund at their highest in four months.
Gold was firm despite rising equities, suggesting an improved outlook for the metal which has climbed around 8 per cent so far in 2015 after a two-year slide.
“I think the sentiment on gold has changed from a very bearish tone last year which was due to expectations of higher US interest rates,’’ said Yuichi Ikemizu, branch manager at Standard Bank in Tokyo.
“We have seen some good demand from Asia around $1,250 and the market is quite long at the moment.’’
Spot, US gold
Spot gold was nearly flat at $1,274.38 an ounce by 0308 GMT, after a modest loss on Monday.
US gold for April delivery eased 0.2 percent to $1,275 an ounce.
Rising inflows into gold funds underlined how some investors are bullish on bullion.
SPDR Gold Trust
Holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, stood at 24.65 million ounces on Monday, the highest since October.
But Ikemizu said the market overall remained “pretty much split between bullish and bearish’’, warning there could be a sharp liquidation of long positions when the US non-farm payrolls data this week turns out strong.
US economy
A Reuters poll of analysts forecasts that US employment data on Friday will show about 230,000 jobs were created in January, slowing slightly from 252,000 in December but still robust.
On Monday, there were signals that the US economy could be on a slightly softer footing than many had thought.
US consumer spending recorded its biggest decline since late 2009 in December, while factory activity cooled in January.
Those numbers followed data last week that showed a slowdown in economic expansion to 2.6 per cent in the fourth quarter from 5 per cent in July-September.
Elsewhere, the economic outlook remained bleak. European and Chinese factories slashed prices in January as production flatlined, heightening global deflation risks that point to another wave of central bank stimulus in the coming year.