Gold price edged sharply higher in on Monday. February gold advanced $16.70, or 1.6%, to trade at $1,076.90 an ounce on Comex. If prices settle around this level, that would be the highest since Dec. 21, when they settled above $1,080. March silver also gained, tacking on 10.2 cents, or 0.7%, to $13.905 an ounce.
Gold is benefiting from a flight to safety. A world stock market sell off on Monday and rising tensions in the Middle East are prompting safe-haven buying in the yellow metal. Short covering in the futures markets is also featured, including some pre-placed buy stop orders being triggered on the up-move.
A slump in Chinese stocks Monday triggered a halt in trading but not before the Shanghai Composite Index registered a nearly 7% drop. The tumble comes on the heels of renewed worries about slumping manufacturing in the world’s second-largest economy and rippled through broader global markets. The Caixin China manufacturing purchasing managers index fell to 48.2 in December from 48.6 in November. A reading below 50 indicates economic contraction.
U.S. manufacturing data were also downbeat, with the Institute for Supply Management reporting that its manufacturing index fell to 48.2% in December to its lowest reading since the last month of the Great Recession.
The unrest in the Middle East and the fall in China’s PMI underpinned steep losses in the U.S. stock market which helped to drive investment demand in gold and silver.
