Gold rose 1 percent early on Monday, boosted by lower equities and weak US data, leaving the metal well placed to log its best monthly performance in four years as turmoil in wider markets increased its safe-haven appeal. Spot gold rose 1.3 percent to $1,238.41 by 2:56 pm EST (1956 GMT) and was on track to finish February up 10.6 percent, its strongest monthly performance since January 2012. US gold futures for April delivery settled up 1.1 percent at $1,234.40 an ounce.
"This has started as a rocky year for global markets and while some countries are moving into negative rates, the outlook for US interest rates hikes is not as positive," Natixis analyst Bernard Dahdah said. Bullion has rallied about 16 percent this year, rediscovering its role as a shelter for risk-averse investors in the face of tumbling equities and fears of a global economic slowdown.
Prices hit a one-year high of $1,260.60 this month, further supported by the repricing of expectations for US interest rate rises. "Coming into March, technical indicators look fairly solid and the ETF movements look quite supportive," said Mitsubishi Corp strategist Jonathan Butler. "On the macroeconomic side, however, next week we are going to have the ECB announcement of possible further quantitative easing, which is going to weigh on the euro against the dollar and all commodities should come under pressure again."
US data showed contracts to buy previously owned US homes fell to their lowest level in a year in January. "It keeps the Fed on the path of accommodation," said Bill O'Neill, co-founder of commodities investment firm Logic Advisors in New Jerse . "The Fed is not going to hike rates in March and probably won't hike rates more than once this year, and I could see them not hiking rates at all this year." Hedge funds and money managers raised their bullish stance in COMEX gold to a one-year high, data showed on Friday. Assets in SPDR Gold Trust, the world's top gold-backed exchange-traded fund, rose to 762.41 tonnes on Friday, the highest in about a year. Gold prices on the Shanghai Gold Exchange were at a premium of about $2 an ounce, indicating buying interest from top consumer China. Physical demand in India, however, remained subdued last week, with the market falling to record discounts. Among other precious metals, platinum rose 2 percent to $931.82 an ounce, while silver gained 1.4 percent to $14.88 and palladium climbed 2.2 percent to $491.
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