Gold jumped more than 1 percent to a three-week high on Tuesday, extending gains on safe-haven buying as stock markets slid on mounting concern over Greece’s future in the euro zone and as oil prices tumbled.
Spot gold was up 1.3 percent at $1,219.76 an ounce at 12:25 p.m. EST (1725 GMT), having earlier touched a peak of $1,222.40, its highest since Dec. 15. The metal rose 1.3 percent on Monday.
U.S. gold futures for February delivery were up 1.4 percent at $1,220.70. Gold priced in euros hit its highest since September 2013 at 1,024.21 euros an ounce.
Political uncertainty in Greece ahead of the country’s elections on Jan. 25 has renewed fears of a possible Greek exit from the euro zone. The S&P 500 fell below the 2,000 level for the first time since Dec. 17 on Tuesday, while other U.S. stock indexes extended their fall and the U.S. dollar turned lower against a basket of major currencies.
“There’s a flight into safety right now,” said Phillip Streible, senior commodities broker at RJO Futures, adding that the S&P’s drop below 2,000 spurred more buying in gold.
Spot gold’s rise above the 100-day moving average at $1,216.16 also spurred technical buying, he said.
Investor sentiment was also rattled by a drop in oil prices to fresh 5-1/2 year lows as crude futures extended the 5 percent plunge of the previous session as worries over a global supply glut intensified.
The pervasive uncertainty prompted investors to buy assets perceived as offering safety such as U.S. and German government bonds, the Japanese yen, and gold.
“There is a lot of risk out there, which is supportive, connected to the euro zone, a possible slowdown in China. Gold is coming back as a safe-haven risk hedge,” said Citi analyst David Wilson.
Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, rose 0.25 percent to 710.81 tonnes on Monday, though they remained near a six-year low.
Meanwhile, data showed hedge funds and money managers raised their net long positions in gold futures and options for the first time in three weeks in the week to Dec. 30.
Premiums on the Shanghai Gold Exchange were $5-$6 an ounce over the global benchmark on Tuesday, seen by dealers as a sign of good demand in top consumer China.
Among other precious metals, silver was up 2.6 percent at $16.56 an ounce. Platinum was up 1.1 percent at $1,218.24 an ounce, while spot palladium was up 1.1 percent at $798.30 an ounce. –Reuters
