Gold opens new year with fanfare

Bloomberg

Gold’s year-end rally is pushing into 2019, with bullion advancing for a fifth straight day as equities posted fresh losses after the worst year since the financial crisis.
The metal hit a six-month high nearing $1,300 an ounce, even as some daily technical indicators highlighted the potential for a reversal after recent gains. The advance came as fresh figures showed China manufacturing shrinking and US equity futures tumbled as stocks slumped across Europe and Asia.
“Mostly people are moving toward safe-haven assets, such as gold, because of the volatility in the equity markets,” Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services, said. The US government shutdown “will only further create more uncertainty, so that will be supportive,” he said.
Gold surged in the final quarter of 2018 as investors positioned themselves for a global slowdown, with fewer rate hikes expected from the US Federal Reserve, and as a steep sell-off in the global equities spurred demand for havens. Worldwide holdings in gold-backed exchange-traded funds have jumped. Wednesday’s gains came even as President Donald Trump signaled the possibility of making a deal to end the partial US government closure.
“Gold is building towards a crescendo” in the first quarter, said Eily Ong, a metals and mining analyst at Bloomberg Intelligence.
Spot gold climbed as much as 0.5 percent to $1,288.83 an ounce, the highest since June 15, and traded at $1,286.86 in London, according to Bloomberg generic pricing. In December, bullion capped the biggest quarterly rise since March 2017.
After that rally, its 14-day relative strength index is well above 70, a level that can indicate a pullback to some investors.
Risk aversion lingered as growth indicators faltered in other parts of the world. In China, the Caixin Media and IHS Markit PMI fell to 49.7, its lowest since May 2017, confirming a trend seen in the official PMI on Monday. A reading below 50 signals contraction.