Gold Rockets To 12-Month High On Safe-Haven Demand Amid Spooked World Marketplace

(Kitco News) - Strong safe-haven demand for gold sent the precious metal soaring to a 12-month high above $1,260.00 Thursday. Another big sell off in world stock markets sent investors and traders scrambling into the gold market. There are growing concerns about the collective health of the major world economies. Gold prices have risen around 15% the past six weeks. April Comex gold was last up $54.00 at $1,248.60 an ounce. March Comex silver was last up $0.523 at $15.81 an ounce.

There was keen worldwide investor and trader risk aversion Thursday as most world stock markets suffered sharp losses. Falling crude oil prices, worries about the European financial system and weak overall world economic growth prospects are combining to spook the world marketplace. The Stoxx Europe 600 index was down nearly 4% Thursday. Hong Kong’s Hang Seng index was also down around 4% on the day. China and Japan markets were closed Thursday for holidays. The Japanese yen has soared against the U.S. dollar on safe-haven demand from market participants in the Asian region.

U.S. stock indexes were sharply lower in afternoon trading Thursday.

There is once again rising concern about European countries’ sovereign debt, as bond yields in several EU countries have risen sharply in recent weeks. The outlier is Germany, whose bonds are considered to be high quality and safe-haven. German bond yields are presently at record lows and in negative territory.

Nymex crude oil prices were trading lower and just below $27.00 a barrel Thursday afternoon. This week’s selling pressure in Nymex crude has pushed prices to near a 12-year low.

Market watchers closely scrutinized Fed Chair Janet Yellen’s testimony on the U.S. economy before a U.S. Senate committee Thursday.  Yellen mentioned that negative interest rates in the U.S. cannot be ruled out, which further fueled the gold market bulls.Her remarks to a U.S. House committee Wednesday were at least partly blamed on selling pressure in world stock markets overnight. Now, many are doubting the Fed will be able to raise U.S. interest rates this year, as had been its intention until the recent turmoil in world markets.

In overnight news, Sweden’s central bank cut its main interest rate even farther, to minus 0.5% from minus 0.35%. The move was not expected and added some anxiety to the world marketplace.

The World Gold Council has issued a report saying world gold demand was flat in 2015, but less supply likely in 2016 will be a positive for the precious metal.

U.S. economic data due for release Thursday was light and included the weekly jobless claims report, which came in better than expected but had little impact on the markets.

Courtesy: Kitco News