Gold futures headed for their longest rally in more than six months as Switzerland’s decision to decouple currency from the euro boosted the demand for gold as a haven.
The Swiss National Bank surprisingly scrapped its three-year policy of capping the Swiss franc against the euro, just a week before the European policy makers meet to talk about the new stimulus, as reported by Bloomberg.
Gold has climbed more than 6 percent this year with signs of deflation and the slowing global economic growth spurring speculation that the Federal Reserve might delay in raising the US interest rates.
The demand for gold will rebound in 2015 after suffering two straight annual drops as consumption in Asia increases and investors return to the exchange-traded products backed by bullion.
Frank McGhee, head dealer at Alliance Financial LLC said, “The Swiss National Bank’s decision caught the market a little off footing, and gold gained as a safe-haven buy. The Swiss are giving up on the euro at the end of a long and painful run.”
According to Reuters, spot gold climbed 2.3% at $1,257.46 per ounce. US gold futures for February delivery climbed 2 percent to $1,259.40 per ounce.
Ole Hansen, Saxo bank senior manager said, “Gold is gaining from a risk-off situation because nobody expected the Swiss central bank not to keep that cap, and this has created potential big losses in many places and is obviously triggering some flight to safety.
Hansen added, “This is happening a week before the ECB meeting, which could add even further pressure to the euro… more QE in the euro zone is a double-edge sword for gold in dollar-denominated terms but gold in euro terms should benefit.”
Silver rose to a high of one month of $17.21 per ounce and rose 1.6% at $17.10 per ounce, platinum climbed 2.3% to $1,255.46 p45 ounce while palladium gained 0.7% to $778.22 per ounce.
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