Gold Shines as a Haven Asset, Touching the $1,200 Mark

A Perfect Storm in Global Markets Causes Gold to Shine

Precious metals surge

Precious metals shone brightly on February 8, 2016. Gold futures for April delivery rose a whopping 3.5% and touched a 14-month high of $1,201.4 per ounce. However, gold’s close was a bit lower at $1,197.9. It rose $40 during the day’s trade.

Silver was the best-performing precious metal on the day as it surged about 4.4% and gave a close of $15.4 per ounce. Platinum and palladium also brought in good profits, rising 2.8% and 3.9%, respectively, during the day’s trade.

Continued global unrest boosted the haven appeal of these non-interest bearing precious metals. A significantly strong risk-off sentiment seems to have gripped the markets. Gold and silver have risen 11.9% and 11.1%, respectively, on a year-to-date basis.

Amid the tensions of the global economic crisis, investors are more comfortable parking their money in traditional haven assets such as gold. The demand for physical gold investment has also seen a rise in the world’s largest gold markets, India and China.

Alternate investments

Alternative gold-based investments such as the SPDR Gold Shares ETF (GLD) rose by 12.2 % on a year-to-date basis. However, the SPDR S&P Metals and Mining ETF (XME) fell 1.3% during the same timeframe. This is because the latter consists of not only precious metals but also other base metals.

Precious metals–based mining stocks RandGold Resources (GOLD), IAMGOLD (IAG), and Yamana Gold (AUY) also rose 8.7%, 7%, and 10.9%, respectively, on February 8. Together, these three stocks make up 9.9% of the price changes in the Market Vectors Gold Miners ETF (GDX). GDX rose 2.5% on Monday following the gains in the precious metals.

Continue to Next Part

Browse this series on Market Realist:

• Part 2 - Precious Metals Have Buoyed Mining Stocks in 2016

• Part 3 - Precious Metals Surge as Equities Show Weakness

• Part 4 - Are Gold Gains Temporary? Investors Keep an Eye on the Fed