Gold tops US$1,300 an ounce for first time in five months as investors head for safety

Gold exceeded US$1,300 an ounce for the first time since August as stagnating world economies increased demand for the metal as a haven. -- PHOTO: BLOOMBERG
Gold exceeded US$1,300 an ounce for the first time since August as stagnating world economies increased demand for the metal as a haven. -- PHOTO: BLOOMBERG

SINGAPORE (Bloomberg) - Gold exceeded US$1,300 an ounce for the first time since August as stagnating world economies increased demand for the metal as a haven.

Assets in exchange-traded products backed by the metal are heading for the first monthly gain since July. Open interest in New York futures and options is at the highest in eight weeks, and money managers have increased their net-bullish position to the largest since August.

After shunning gold for two years, investors are returning to the metal amid concern that U.S. growth won't be enough to offset weakness in foreign economies. The International Monetary Fund and the World Bank cut their outlooks for global growth this month, even as they upgraded their estimates for American expansion. Policy makers in Europe and Asia are being challenged to come up with fresh ways to stimulate growth amid prolonged below-target inflation.

"Capital is flowing into safe assets such as gold," said Mark To, head of research at Wing Fung Financial Group, a trader and refiner in Hong Kong. "The market is currently full of news that's supportive of higher gold prices - expectations for lower global growth, uncertainty around what the ECB will do and more stimulus around the world," he said, referring to the European Central Bank by its initials.

Bullion for immediate delivery climbed as much as 0.6 per cent to US$1,302.94 an ounce and traded at US$1,300.73 by 1:59 p.m. in Singapore, according to Bloomberg generic pricing.