(Kitco News) – Financial markets are in turmoil the first week of the new year, and gold is a main beneficiary. With China’s currency – the yuan – slumping and helping to pressure global equities, the yellow metal seems to have regained its safe-haven status.
Gold is setting up for a fifth consecutive positive close this week in yuan terms, as well as in U.S. dollar terms.
Thursday, gold prices pushed above the $1,100 an ounce mark, hitting a two-month high, amid volatility in Chinese and global stock and financial markets, as well as tensions in the Middle East. February Comex gold futures were last quoted up $17.00 at $1,108.90 an ounce.
Gold in yuan terms also rose to levels last seen in October and hit a high of ¥7,310 an ounce, and was last quoted up 1.88%.
“It’s been another good day for gold, which along with JPY continues to benefit from capital leaving risk markets like stocks and commodities and seeking defensive havens,” CMC Market’s Colin Cieszynski told Kitco News Thursday afternoon.
“U.S. markets have been under pressure again today with traders spooked by uncertainly over what China dropping its circuit-breakers (on stocks) could mean for trading tonight. I suspect we could get a big washout but at some point the declines should attract bargain hunters,” he added.
Cieszynski said the recent U.S. dollar rally is having a negative impact on the Chinese economy and it remains to be seen if Chinese officials’ reaction to devalue the yuan will have a positive impact in 2016.
Equities continue to be in panic mode, with the S&P500 last down down 2.26% and Nasdaq off nearly 3%.