BENGALURU (Reuters) - Gold hit its highest in more than a week on Tuesday, vaulting over the $1,200-per-ounce mark, as investors sought refuge in the metal after stock markets sold off due to anti-euro comments by an Italian lawmaker.
Spot gold jumped 1.4 percent to $1,204.50 per ounce by 12:08 p.m. EDT (1608 GMT), after reaching its highest since Sept. 21 at $1,208.23. U.S. gold futures gained 1.4 percent to $1,208.50.
Stocks fell worldwide, while European assets also dropped after the economics spokesman for Italy’s ruling League party, Claudio Borghi, said most of the country’s problems could be solved by having its own currency.
“The equity market sell-off has unnerved investors and is bringing in some safe-haven bids,” said FOREX.com analyst Fawad Razaqzada.
“Gold still needs to break and hold above major resistance in the $1,205-$1,215 range before we can be confident that a low has been formed.”
Analysts noted, however, that gold had not been influenced by the dollar’s broad-based rise, as represented by the dollar index. A rising dollar normally reduces the attractiveness of dollar-priced gold for overseas investors.
“One thing that was interesting today was that the dollar index was over 95 and gold completely ignored that. The index around this level is a major headwind for gold and when you ignore a headwind it is a bullish signal,” said George Gero, managing director of RBC Wealth Management.
Gold has fallen for the past six months, losing 13 percent, largely due to dollar strength, with the U.S. currency benefiting from a vibrant U.S. economy, rising U.S. interest rates and fears of a global trade war.
Market participants are also on the lookout for additional clues about the pace of interest rate hikes from U.S. Federal Reserve Chairman Jerome Powell, who was due to speak on “The Outlook for Employment and Inflation” before the National Association for Business Economics later on Tuesday.
The Fed raised rates last week and said it planned four more increases by the end of 2019 and another in 2020, citing steady economic growth and a robust jobs market.
Rising interest rates boost the greenback and increase the opportunity cost of holding gold.
“As long as the U.S. economy continues to grow strongly and the news in terms of trade is generally in the favor of U.S., gold is going to struggle,” Mitsubishi analyst Jonathan Butler said.
In other precious metals, silver hopped on the gold bandwagon, rising 2.1 percent to $14.77 per ounce, after earlier hitting its highest since Aug. 28.
Platinum rose 1.4 percent to $833 per ounce, while palladium eased 0.3 percent to $1,053.22 per ounce.
Additional reporting by Nallur Sethuraman, Arpan Varghese, Vijaykumar Vedala and Sumita Layek in Bengaluru; Editing by Edmund Blair and Jonathan Oatis