Gold set to log its best week in 10 months on safe-haven demand

Gold traded near its highest level in four months on 16 January and looked set to log its best week in ten months, as market volatility post the SNB policy decision boosted the metal's safe-haven status.

Spot gold was trading at $1,259.40 an ounce at 0925 GMT, after striking $1,266.11 on 15 January, a level last hit in September 2014.

The yellow metal has added some 3% this week, its biggest weekly jump since March 2014, and has gained over 6% so far this month.

James Gardiner, a trader at MKS Group, told Reuters: "Gold looks like the flavour of the month at the moment and has now pushed above some key downward trend lines against the dollar."

"The [Swiss National Bank] announcement has really shaken the market," he said, adding that the metal could witness some momentum buying today.

HSBC analysts said in a note: "Gold may be lifted further as the repercussions of the SNB action continue to reverberate in the markets and portfolio and real money managers decide on how to allocate holdings in light of franc developments. These actions will likely buoy gold, at least for a while."

Most European and Asian equity markets stumbled on 16 January after the SNB's surprising move.

In a reflection of improving investor confidence, the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 1.35% to 717.15 tonnes on 15 January.

The global markets volatility on 15 January pushed investors to direct money towards the precious metal. A breach of some key technical levels also propped-up prices.

The Swiss National Bank (SNB) shocked financial markets on Thursday by scrapping a three-year-old cap on the franc, sending the currency 30% higher against the euro and stocks plunging on concerns for the export-reliant Swiss economy.

Capital Economics said in a note: "The resilience of gold in the face of a surging dollar and collapsing oil price supports our view that the precious metal will recover further this year and next..."