Forexpros – Gold futures advanced for a second day on Wednesday, as the precious metal regained some of its safe haven appeal amid mounting fears over the global economic outlook.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,706.85 a troy ounce during early European morning trade, gaining 0.38%.
It earlier rose by as much as 0.61% to trade at a two-day high of USD1,710.75 a troy ounce.
Gold is often considered a safe haven during times of global financial turmoil, but for the past two months, the precious metal has risen and fallen in line with riskier assets, such as stocks and industrial commodities. But that correlation finally unraveled, as gold moved higher along with the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.35% to trade at 78.68.
Risk aversion sharpened following reports saying that Belgium and France were in fresh talks over an existing rescue deal for troubled lender Dexia, which could see France take on a larger role in the bailout plan.
The report added to ongoing concerns that the euro zone’s second largest economy could loose its triple-A rating.
Investors were also jittery after China’s HSBC preliminary manufacturing purchasing managers’ index fell to a contractionary reading of 48.0 in November, down from 51.0 in October.
It was the lowest level since March 2009, renewing fears over a ‘hard landing’ for the world’s second largest economy.
On Tuesday, the U.S. Commerce Department cut its estimate for third quarter gross domestic product growth to 2.0% from an earlier reading of 2.5%.
The weak GDP figure fuelled speculation that the Federal Reserve could introduce further stimulus measures in the near-term to boost U.S. economic growth.
Minutes from the Fed’s most recent policy-setting meeting published Tuesday showed that a few policymakers pushed Fed Chairman Ben Bernanke for further accommodative policy.
Elsewhere on the Comex, silver for December delivery tumbled 2.15% to trade at USD32.23 a troy ounce, while copper for December delivery dropped 1.05% to trade at USD3.298 a pound.
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