Gold prices are the best-performing asset so far this year, as mounting worries over global economic growth have spurred safe haven buying.
As of today, gold and silver have rallied 12% and 11%, respectively. That compares to a 13% decline in natural gas and a 12% decline in the tech-heavy NASDAQ Composite Index.
Gold futures finished near $1,200 an ounce on Wednesday for their second-best settlement since mid-June. March silver ended at $15.27 an ounce, after briefly reaching $15.43 earlier in the week—the precious metal’s highest level since early November.
“Gold was like a beach ball that had been pushed too low in the water and is now bouncing higher with a vengeance,” MarketWatch quoted Mark O’Byrne, research director at Dublin-based GoldCore. (Source: “Gold settles near $1,200, at highest level since June,” MarketWatch, February 8, 2016.)
Among currencies that are depreciating this year are the Mexican peso (which is down eight percent), the Russian ruble (which has weakened seven percent), and the Australian dollar (down more than two percent).
Increasing signs that global growth is fading—led by the U.S. and China, the world’s largest economies—have prompted investors to sell stocks and seek safety in hard assets.
Those weak data led investors to expect fewer U.S. rate hikes this year than the four they had been pricing in a few weeks ago, perhaps only one. (Source: “Gold price surges to highest level since June as share prices slide,” Reuters, February 8, 2016.)
Investors are now more convinced that the yellow precious metal’s rally since the start of 2016 is sustainable and that its next major resistance level could be $1,120 an ounce, as Reuters reported, citing unidentified traders.
In other metals, platinum tracked gold and silver, gaining as much as four percent this year, while copper and palladium bucked the trend. The red metal is down four percent, while the lustrous silvery-white metal has given up eight percent.