Singapore - Gold climbed for the first time in five days as the attacks in Paris reinvigorated bullion’s traditional role as a haven. Analysts cautioned that the gains may prove to be short term, with the metal’s trajectory still likely to be determined by the Federal Reserve.
Bullion for immediate delivery advanced as much as 0.8 percent to $1 092.47 an ounce and was at $1,089.68 at 8:56 a.m. in Singapore, according to Bloomberg generic pricing. Prices sank 0.5 percent last week, dropping to $1 074.25 on Thursday, the lowest since February 2010.
Teams of Islamic State-backed gunmen killed at least 129 people across the French capital on Friday in Europe’s worst terror incident in more than a decade. The event may spur short- term demand for gold, according to Commerzbank and Dubai-based bank Emirates NBD PJSC. Prices have retreated 8 percent this year as signs of resilient U.S. economic growth boosted the odds that the Federal Reserve will soon raise rates.
“It’s a knee-jerk reaction to the tragic events over the weekend,” Victor Thianpiriya, a Singapore-based analyst at Australia & New Zealand Banking Group, said by e-mail. “Ultimately, I don’t think these gains will be sustained.”
Other precious metals also climbed on Monday. Platinum for immediate delivery rose 0.6 percent to $864.90, the first gain since Oct. 28, while silver advanced as much as 1.3 percent. Spot palladium gained 0.2 percent after tumbling 13 percent last week, the most since May 2010.
Annual drop
Gold is heading for a third annual decline as Fed policy makers lay the groundwork to raise borrowing costs for the first time since 2006. Bullion loses out when monetary policy tightens because the metal doesn’t offer interest or pay dividends. Investors see a 66 percent chance the US central bank will boost rates next month.
“Against the backdrop of terror attacks in Paris, adjustments to global asset prices will boost safe-haven demand for precious metals,” Huatai Great Wall Futures wrote in a note on Monday. “Gold and silver prices are expected to rise this week on risk aversion in tandem with the dollar.”
-With assistance from Anthony DiPaola.
BLOOMBERG