Safe-haven punters return with aplomb as gold price jumps

Gold futures were on the up on 4 April as worries over the French election, President Donald Trump's current inability to set the US legislative agenda, and concerns over Brexit brought safe-haven investors out in force as the dollar weakened.

At 4:39pm BST, Comex gold futures contract was up 0.24% or $3.00 to $1,257.60 an ounce, while spot gold was up 0.09% or $1.14 to $1,254.74 an ounce. John Wyn-Evans, head of investment strategy at Investec wealth & investment noted the yellow metal, seen by many as the ultimate safe-haven asset, is up over 8% this year.

"We know that gold's value correlates strongly to three main asset classes, the dollar, US 10-year bond yields and inflation, and all of those correlations have been in gold's favour this year, but, even so, gold's rise betrays some nervousness and is worth monitoring."

Commenting on physical gold holdings in the UK, James Trescothick, chief global strategist at easyMarkets, said: "Why is the UK so reserved with its love for gold? Perhaps arrogance! The sterling has a key role as a global reserve currency, and it is still one of the top five most valuable currencies against the dollar.

"However, now that the UK is standing on the abyss of uncertainty following the EU referendum vote and the triggering of Article 50, further falls in the pound may evoke a change of attitude."

Elsewhere, the Comex silver contract was up 0.54% or 10 cents to $18.31 an ounce, while spot platinum was up 0.41% or $3.90 to $960.65 an ounce.

Meanwhile, oil futures bounced back on to positive turf, after the West Texas Intermediate (WTI) gained 1.35% or 68 cents to $50.92 per barrel, holding firm above the psychological $50-level, while Brent was up 1.64% or 87 cents to $53.99 per barrel.

Many in the market continue to speculate that Opec and non-Opec producers' historic agreement, a first of its kind in 15 years, inked in December 2016, would be extended. It was designed to take almost 1.8m barrels per day (bpd) of crude oil production offline and is due to expire towards the end of June.

FXTM research analyst Lukman Otunuga urged caution ahead as Opec wrangles over its position. "With global inventories remaining stubbornly high despite Opec's valiant efforts to stabilise oil markets and US shale resurgence questioning the effectiveness of the supply cuts, buying sentiment is frighteningly low.

"Although there is speculation about Opec extending the supply cut deal by another six months, optimism is rapidly fading over the cartel's ability to elevate oil prices. WTI crude may be in the process of a technical bounce which could test the $51 pivotal level. Bears need to break back below $50 to reclaim control with targets stretching back towards $47."