Gold prices rose on Thursday towards a more than three-month high hit earlier this week, as a selloff in global equities triggered safe-haven bids for the metal amid rising political and economic uncertainties.
Asian shares dived as hundreds of billions of dollars hemorrhaged from global markets after a rout in tech stocks inflicted the largest daily decline on Wall Street since 2011, wiping out all its gains for the year.
Spot gold was up 0.3 percent at $1,237.04 an ounce as of 0357 GMT, not far off Tuesday’s $1,239.68, the highest since July 17.
U.S. gold futures were up 0.7 percent at $1,239.70 an ounce.
“After the massive sell-off in global equities, investors are looking for a safe-haven shelter. They are starting to diversify and look at bullion as a means of value maintenance, with no end in sight appearing for the bear market,”said Benjamin Lu, a commodities analyst with Phillip Futures.
“We see more upside potential for gold prices, and if it continues to move up and reaches the $1,245 level, it could trigger a series of short covers, pushing prices to $1,255.”
Dollar-denominated gold is used as an alternative investment during times of political and financial uncertainty.
Gold prices have gained more than 6 percent after falling in mid-August to their lowest since January 2017 at $1,159.96 an ounce.
Concerns ranging from U.S.-China trade disputes to Italy’s budget woes and Brexit uncertainty have accelerated the flight to safety, said Lukman Otunuga, aresearch analyst with FXTM.
“The growing uncertainty created from U.S.-Saudi tensions and Italy’s budget woes can already be reflected across financial markets with investors avoiding riskier assets. The risk-off environment should offer gold an opportunity to shine brightly,” he said.
Spot gold may break a resistance at $1,238 per ounce, and edge up into a range of $1,252-$1,263, according to Reuters technical analyst Wang Tao.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.24 percent to 24,101,732.54 ounces on Wednesday, the highest since early September.
“The losses in global equity markets continue to provide support to the precious metals sector, with gold-backed ETFs recording strong inflows,” ANZ analysts said in a research note.
Meanwhile, the dollar index, which measures the greenback against a basket of six major currencies, was down 0.2 percent.
Among other precious metals, palladium was down 0.2 percent at $1,122.40 an ounce, drifting away from a record high of $1,150.50 an ounce marked on Tuesday.
Silver rose 0.7 percent to $14.74 per ounce, while platinum was up 0.5 percent at $831.60 per ounce.