SINGAPORE – Reaching near its strongest level in 5 months, gold steadied above $1,300 a tonne perhaps due to a €1.1 trillion stimulus package launched by the European Central Bank to invigorate the euro zone economy, and its announcement to purchase 60 billion euros a month until September 2016.
The bank’s bold decision also fuelled risk appetite, with Asian stocks stretching a rally in global equities. The metal’s gains came despite a slide in the euro which analysts say also attest to the metal’s safe-haven draw. The single currency is wallowing near 11-year lows against the dollar. Spot gold has risen nearly 10 percent so far this year, rebounding from a small loss in 2014. It was little changed at $1,300.24 an ounce by 0240 GMT, after hitting a session high of $1,302.50.
HSBC analyst James Steel said, “Despite gold’s historical positive correlation to the euro, the scope for further euro losses would provide a boost for bullion, in our view, based partially on gold’s appeal as a perceived safe haven asset along with gold being a currency that you cannot print more of.” Gold may have room to rise further in the near term, said Steel, but to do so it may need to be able to defend $1,300, a level that could discourage some price-sensitive buyers in emerging markets.
