Gold climbed for the first time in five days as the attacks in Paris reinvigorated bullion’s traditional role as a haven.
Analysts cautioned that the gains might be short-lived, with the metal’s trajectory still likely to be determined by the US Federal Reserve.
Bullion for immediate delivery yesterday advanced as much as 1.2 percent to US$1,096.44 per ounce and was at US$1,096.35 per ounce at 2:43pm in Singapore trading, according to Bloomberg generic pricing. Prices sank 0.5 percent last week, dropping to US$1,074.25 per ounce on Thursday, the lowest since February 2010.
Islamic State-backed attackers killed at least 129 people across the French capital on Friday in Europe’s worst terror incident in more than a decade.
The event might spur short-term demand for gold, according to Commerzbank AG and Dubai-based bank Emirates NBD PJSC. Prices have retreated 7.4 percent this year as signs of resilient US economic growth boosted the odds that the Fed would soon raise rates.
“It’s a knee-jerk reaction to the tragic events over the weekend,” Australia & New Zealand Banking Group Ltd Singapore-based analyst Victor Thianpiriya wrote in an e-mail. “Ultimately, I don’t think these gains will be sustained.”
Other precious metals also climbed yesterday. Platinum for immediate delivery rose 1.5 percent to US$872.35, the first gain since Oct. 28, while silver advanced as much as 1.3 percent to US$14.4437. Spot palladium gained 1.7 percent after tumbling 13 percent last week, the most since May 2010.
Gold is heading for a third annual decline as Fed policymakers lay the groundwork to raise borrowing costs for the first time since 2006.
Bullion loses out when monetary policy tightens because the metal does not offer interest or pay dividends. Investors see a 62 percent chance the US central bank plans to boost rates next month.
“Against the backdrop of terror attacks in Paris, adjustments to global asset prices will boost safe-haven demand for precious metals,” Huatai Great Wall Futures Co (華泰期貨) wrote in a note yesterday. “Gold and silver prices are expected to rise this week on risk aversion in tandem with the dollar.”
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