Gold opened the trading week higher on Monday, buoyed by safe-haven bids after Asian equities tumbled to their lowest since 2011 as investors shunned risky assets on the heels of weak U.S. economic data.
U.S. retail sales fell in December along with industrial production, the latest indication that economic growth braked sharply in the fourth quarter. Oil prices slid to the lowest since 2003.
The renewed weakness in the world’s top economy raises doubts about whether the Federal Reserve will raise interest rates again in March, boding well for non-interest bearing assets like gold.
“It will be increasingly difficult for another hike in March, considering that China will continue to be weak,” said Daniel Ang, investment analyst at Phillip Futures. “A further hike may be possible only in the third or fourth quarter.”
The unabated decline in oil prices further fanned worries over a global economic downturn, pushing investors to assets deemed safe including gold, said Ang.
Spot gold was up 0.1 percent at $1,090 an ounce by 0606 GMT, after losing 1.4 percent last week.
U.S. gold for February delivery was flat at $1,089.90 an ounce.