Gold rises as investors rush to safe havens

September, 03rd 2011

London: Gold and oil both reacted strongly to data on Friday showing US job growth had ground to a halt.

Gold rose to a one-and-a-half week high on Friday, as investors sought refuge in safe haven assets and oil futures dropped more than $2 (Dh7.50).

Investors clung to the precious metal as assets perceived as higher risk sold off in the wake of the disappointing report, with European stocks falling sharply while US Treasuries rallied. At 1403 GMT, spot gold rose 2.7 per cent to $1,873.79 an ounce from $1,824.55 late in New York on Thursday. It earlier rose to a high of $1,879.30, its highest level since hitting a record on August 23.

Analysts said the gains were tempered by some caution about how much further gold's rally could go following the precious metal's strong gains in recent weeks, and a lack of large position-taking among investors ahead of a long weekend in the United States.

"The initial reaction on the gold price was that it traded a bit higher after the weaker-than-expected non-farm payrolls data," said Georgette Boele, head of forex and commodities research at ABN Amro.

The metal rose 12 per cent in August, its strongest monthly gain since November 2009 and has hit record highs several times in recent weeks following a run of soft economic data from the US.

By 1309 GMT, Brent was trading $2.41 lower at $111.88 and US crude was $3.04 lower at $85.89, just off a session low of $85.69.

Source: Gulf News