Gold edged up to a three-month high early on Tuesday as weak global manufacturing surveys soured appetite for risky assets and pushed investors toward safe havens. Spot gold was little changed at $1,128.80 an ounce by 0028 GMT, just off an initial high of $1,130.11, its strongest since November 3. US gold for April delivery gained 0.2 per cent to $1,129.80 an ounce.
Global manufacturing expansion accelerated slightly but remained weak at the start of 2016 as faster growth in developed markets failed to offset a contraction in emerging economies. In China, a gauge of factory activity fell to its lowest since mid-2012.
Gold, typically the asset of choice in times of uncertainty, has benefitted from the volatility in other financial markets. It posted its best monthly jump in a year in January, and has gained more than 6 per cent so far in 2015.
The US economy could suffer, with inflation remaining too low, if recent volatility in financial markets persists and signals a slowdown in the global economy, the Federal Reserve Vice Chairman Stanley Fischer said.
The Fed’s statement last week that it will closely monitor the global economy and financial markets lifted gold to near $1,130, as it underlined expectations that US policymakers may take it slowly in raising interest rates this year.
Reflecting growing confidence in gold, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose to 21.9 million ounces on Monday, the most since November 3.
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