The gold price rose for the third consecutive day to close at a near seven week high as the dollar came under pressure and global equities retreated. The gold price has surged $37 since Monday to trade at $1,232.70 per ounce. Gold has advanced over 7% since hitting a four year low in November. Silver has advanced over 10% in the same period.
The dollar fell against a basket of currencies as traders took the opportunity to crystallise profits before the end of the fourth quarter. Typically the gold price and the dollar move in opposite directions.
Global stock markets came under considerable pressure with the FTSE 100 closing down 2% and the Chinese market fell by over 5%. Investors are becoming increasingly concerned over the health of the Chinese economy as inflation data indicates it is slowing. The equity selloff spread to the periphery of Europe with the Greek market down 15% as worries over their ability to service their debt returned.
The decision by the Indian government to scrap import restrictions has been improved sentiment towards the yellow metal. Experts now expect physical demand in India to rise significantly putting upward pressure on the price. Prior to the restrictions India was the world’s largest consumer of gold.
The world’s largest gold backed ETF, The SPDR Gold Trust, confirmed its holding increased by 0.37% to 721 metric tonnes. Gold is currently trading at £784 per ounce, silver £10.89 per ounce, platinum £798.30 per ounce and palladium £519.61 per ounce.