Gold prices exceeded $1,250 per ounce on Wednesday and were headed to settle their highest level in over a year.
Gold for April delivery touched $1,254 per ounce before paring gains to $1,249.60 per ounce, up 2.2%, at 11:30 a.m. in New York.
“If gold is able to remain over $1,250, then it shouldn’t be shocking to see $1,300 gold in near term,” Moe Zulfiqar, a research analyst at Lombardi Financial, said in an email. “Gold is rising because investors are scared.”
Bullion stretched gains earlier in the day after a report showed an increase in new home inventories in the U.S., feeding worries about the health of the world’s largest economy.
Sales of new homes plunged 9.2% to 494,000 last month, the Commerce Department said.
A steep rout in global stocks and crude prices over the past few days helped further lift the yellow metal and its peers. All three major U.S. indexes declined more than 1% when markets opened on Wednesday. In London, the FTSE 100 closed 1.6% lower, and in Paris, the CAC 40 closed down 2%.
SPDR Gold Trust (NYSEARCA:GLD), the world’s biggest gold exchange-traded fund (ETF), rose 1.2% to $118.66 after hitting $119.85 earlier in the day. It has gained 17.1% so far this year.