Oil Rout Lights Up A Rally In Gold

Oil Rout Lights Up A Rally In Gold

Gold prices are yet again on the move as optimism around equities and riskier assets diminished on the back of softer oil prices. Gold Futures for April delivery surged 1.15% to 1,236.60 today, holding firmly above $1,230 level.

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Flocking to Safer Assets

Spot gold moved up by 0.84% to 1235.70 an ounce during the early U.S. hours after climbing 1.5% during the last session. Inflows into bullion funds followed rally in the yellow metal yesterday. Commenting on the present momentum of gold, Societe Generale SA (ADR) (OTCMKTS:SCGLY) analyst Robin Bhar said that financial market volatility and negative interest rates are is fueling demand for gold.

Meanwhile, analysts at MKS Group believe that gold can breach a high of $1,240 in the short term and can rally up to $1,260 within a year. Gold has already touched highs above that level last week. The SPDR Gold Trust (ETF) (NYSEARCA:GLD), one of the top rated gold funds, witnessed its highest assets inflows since March 2015. Such fund inflows have largely balanced the weaker demand among Asian buyers, who have turned into sellers to claim profits from the gold rally.

News making the rounds that the Federal Reserve may not increase rates this year is also supporting the yellow metal. Gold investors now will closely follow comments from Federal Reserve members to get a clue about its monetary tightening stance, though the Fed being data dependent, it is doubtful that the central bank itself knows which direction it will go in.

Gold Mining Update

Among the gold mining companies, AngloGold Ashanti Limited (ADR) (NYSE:AU) was beaming with positivity after Citigroup Inc. (NYSE:C) upgraded its outlook on it to ‘Neutral’ from ‘Sell’ owning to its better performance in 2015 and successful debt reduction program.

Barrick Gold Corporation (USA) (NYSE:ABX) posted an update on its study results at four projects, namely, Cortez, Goldrush, Turquoise Ridge and Lagunas Norte. The company noted that the four projects have the capacity to deliver higher gold production, leading to increased cash flows from 2020 onwards.

Goldcorp Inc. (USA) (NYSE:GG) has given consent to buy 7,400,000 units of Sirios Resources through a private placement. Gross proceeds for Sirios will be close to $962,000 Canadian Dollars, implying a 9.9% ownership for Goldcorp in the former.