Gold Stable as Oil Tumbles on Iran Comeback

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.


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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza