Share

Gold bounces back as equities slide

Singapore - Gold added to overnight gains on Thursday, buoyed along with other safe-haven assets, as weak global manufacturing data and the first diagnosis of Ebola in the United States unnerved equities.

Gold, often seen as an alternative investment during times of uncertainty, had edged up 0.6% to $1 220.55 an ounce by 05:44. The metal gained 0.4% on Wednesday after earlier falling towards a nine-month low.

Asian stocks dipped following Wall Street's losses, sending investors scurrying to the safety of US bonds, the Japanese yen and gold. US stocks dropped more than 1% on Wednesday as the Ebola health scare pressured shares of airlines and transportation companies.

"With the likelihood of further weakness in equity markets, coupled with the still volatile situation in Hong Kong, we would rather not want to be short gold here, as we think the precious metal may benefit from some short-covering heading into the weekend," INTL FCStone analyst Edward Meir said.

Investors were eyeing unrest in Hong Kong, where tens of thousands of mostly young people have continued protests for nearly a week, demanding China introduce full democracy so the city can freely choose its own leader.

Gold could gain more if the situation gets tense or stock markets take a further hit as businesses get affected.

Some banks and other financial firms have already begun moving staff to back-up premises on the outskirts of Hong Kong to prevent growing unrest from disrupting trading and other critical functions.

The recent gains pushed gold further away from $1 200 - a key psychological level that would have triggered a severe sell-off.

Gold, however, is not completely out of the woods.

The strength in the US dollar has weighed heavily on it and other precious metals in recent weeks. Though the dollar rally paused Thursday, it was not too far from a four-year peak against a basket of major currencies.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and a good measure of investor sentiment, said its holdings fell 1.20 tonnes to 768.66 tonnes on Wednesday - the lowest since December 2008.

Investors were also eyeing the outcome of a policy meeting Thursday by the European Central Bank, which is expected to present details of a new asset-buying plan that it hopes will revive the flagging eurozone economy and see off the spectre of deflation.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.93
-0.1%
Rand - Pound
23.90
-0.0%
Rand - Euro
20.44
+0.1%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.1%
Platinum
904.58
+0.9%
Palladium
1,012.82
+1.1%
Gold
2,218.03
+1.1%
Silver
24.80
+0.7%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.9%
Resource 10
57,251
+2.9%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders