Gold prices moved firmly higher on Tuesday as oil futures lost over 5% and Chinese stocks traded sharply lower. Investors sentiment is sharply lower and safe-haven options are becoming the prefered option.
Earlier on Tuesday, February gold rose $10.20, or 0.9%, to $1,115.50 an ounce.
The climb came as traders were faced with another nervous day on the financial markets, with oil sliding below $30 a barrel again. This fueled a sharp stock selloff in China, where the Shanghai Composite Index closed 6.4% lower.
When gold prices are rising big precious metals miners are among the early winners.
A slightly weaker dollar also supported gold prices. The DXY index which measures the greenback against a basket of other major currencies, fell 0.1% to 99.27. A weaker dollar tends to support dollar-denominated commodities, such as gold, as they become cheaper to other currency holders.
Gold closed above its 100-day moving average on Monday for the first time since October, a bullish signal for some analysts who study charts. It’s now trading near the 50 percent retracement of its drop from October to December, a Fibonacci level that some traders use to gauge whether a rally will continue or stall. Prices may climb toward $1,200 if they breach strong technical resistance of about $1,140.
Elsewhere in the energy spectrum, silver for March delivery rose 0.4% to $14.32 an ounce, while palladium for the same month climbed 0.1% to $492.05 an ounce. April platinum shaved off 0.2% to $859.70 an ounce, while copper for March dropped 0.4% to $1.99 a pound.