The gold price rise continues on Wednesday as investors are pouring money again in the safe-haven yellow metal amid renewed worries about an excess of oil supplies.
Gold futures for April delivery rose as much as 1.1% to $1,235 in electronic trading Wednesday morning. Futures settled at $1,222.60, up 1% on Tuesday.
Oil prices fell after Saudi Arabia, one of the world’s largest oil producing countries, ruled out production cuts, and after a report showed U.S. crude stockpiles touched a record. The U.S. crude benchmark shed $1.17 to $30.70.
Saudi Oil Minister Ali al-Naimi said output cuts would not happen although more countries would take part in a deal to freeze oil production.
A report on Tuesday from the American Petroleum Institute (API) showed crude inventories rose by 7.1 million barrels last week, far surpassing expectations of a 3.4-million-barrel increase.
The oil price rout has been pulling global equities lower since Tuesday. On Wednesday morning, Dow futures dropped 0.9%, while S&P futures fell 0.8% and Nasdaq futures were down 1.1%. U.S. stocks closed lower on Tuesday, with Dow, S&P, and Nasdaq surrendering 1.1%, 1.3%, and 1.5% respectively.
In London on Wednesday, the FTSE 100 tumbled 1.4%, while in Frankfurt, the DAX slid 2.4%. In Paris, the CAC 40 slipped 2.%. In Asia, the Tokyo’s Nikkei closed 0.85% lower.
Investors are also awaiting more comments from U.S. Federal Reserve policymakers for hints on the central bank’s view on the health of the world’s largest economy.
Fed Chair Janet Yellen has indicated that the central bank may stick to its plan to hike rates by gradually this year, but other policymakers have voiced caution about moving ahead ahead amid the slowing world economy.
On Tuesday, China depreciated its currency the yuan the most in six weeks. The move was interpreted as yet another signal of slowness in the Chinese economy. The move added to fears that China, which is one of the largest commodity importers, may reduce its imports.
Gold is the best performing investment so far this year. Gold prices have rallied 16.8%, compared to a 6% drop in the S&P 500, and 22% slump in U.S. crude.