Gold Prices Rise on Fears of Economic Slowdown

Gold prices rose after weak economic data from Europe raised new fears of a slowdown in global growth and pushed some investors toward assets considered safer. Front-month gold futures climbed 1.1% to $1,523.70 a troy ounce Monday after downbeat economic figures from Europe sparked fresh worries among investors. The data showed sentiment about manufacturing in the eurozone is at its weakest in years and the outlook for manufacturing in Germany, the region’s largest economy, is at its worst point in more than a decade. Gold prices hit a six-year high earlier this month amid expectations that bond yields in the U.S. and around the globe are likely to fall further as central banks look to fight slowing growth. Investors have generally been looking to put their money into safer assets amid fears of a decelerating global economy.

Factors including political uncertainty and weak economic data were driving yields lower on Monday, helping haven commodities such as gold, said

Tai Wong,

head of base and precious metals derivatives trading at Bank of Montreal.

Monday’s falling yields helped lift gold prices. Gold bars in Germany.


Michaela Handrek-Rehle/Bloomberg News

Falling yields tend to benefit gold because the metal offers no return simply for holding it. U.S. government-bond prices rose Monday, and yields, which fall when bond prices rise, declined. Gold futures slipped last week after the Federal Reserve cut interest rates but signaled that officials were divided on how much further to reduce rates in coming months. The precious metal recouped some of those declines Friday and continued to rise Monday. In another sign that investors are looking to haven assets, front-month silver futures rose 4.9% to $18.60 a troy ounce. The precious metal is also near a multiyear peak reached earlier this month. Elsewhere in commodities, front-month oil futures gained Monday, with Brent crude, the global gauge of prices, rising 0.8% to $64.77 a barrel and U.S. prices advancing 0.9% to $58.64 a barrel. Investors are still weighing how long it will take for Saudi Arabia to return to full oil production after attacks on Sept. 14 took out roughly half of the kingdom’s crude output. Saudi Arabian Oil Co., or Aramco, has said restoring oil operations to full working order should take at most 10 weeks, but some officials and contractors say the repairs could take months longer, The Wall Street Journal reported.

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