Gold hits 2012 high on latest QE concerns

The gold spot price rose to its highest level this year yesterday as global equity markets started the quarter with strong rises.

The price of gold rose 0.9% to $1,790, its highest level since mid-November last year, after a Federal Reserve board member said QE3 would likely persist throughout most of 2013.

At the same time, better than expected US manufacturing data helped lift equity markets on the first day of the quarter – but indices look set to pare those gains today despite Australia cutting interest rates on global growth fears.

Overnight, the S&P 500 added 0.4% to 1,444 after a US manufacturing index rose for the first time since May. Later, other indices also made gains after the Reserve Bank of Australia cut the base rate to 3.25%, its third cut in six months.

The cut took investors by surprise, suggesting a more concerted slowdown in China than previously thought, but helped Australia’s benchmark index rise 1% on the day.

Gains for the MSCI Asia-Pacific index were more muted as it rose just 0.3%, while Japan’s Nikkei inched up 0.2% from Monday’s three-week low.

But European indices are opening lower this morning after notable rises yesterday. Futures suggest a 0.4% fall in the FTSE 100 at the open after the blue-chip index rose 1.4% to 5,820 on Monday.

The euro is up 0.2% at $1.29, but equity markets in France and Germany are also pulling back after yesterday’s gains.


This article was first published on Investment Week

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