Rattled by unending oil price slide, investors seek refuge in gold

Gold climbed to the highest this week and investors boosted holdings in bullion-backed funds as global market turmoil spurred demand for a haven.

The metal rose as much as 0.9% in London as most commodities dropped and a gauge of world equities was on the brink of entering a bear market. Citigroup raised its forecast for gold prices this year and said the metal’s role as a haven is back in vogue, while cutting the outlook for crude oil and base metals.

"Gold is up as a direct result of what is happening in equity markets," said Jens Pedersen, an analyst at Danske Bank A/S in Copenhagen.

“The weakness in the global economy is causing people to rethink the likely path the Fed will take in tightening, and they’re now pricing one interest rate increase later in the year, rather than several.” Bullion for immediate delivery gained 0.7% to $1,095.01 an ounce by 11:13 a.m. in London, according to Bloomberg generic pricing. It’s the best-performing metal so far this month, with a gain of 3.2%. Citigroup raised its 2016 forecast by 7.5% to $1,070, it said in a report.

Investors bought gold through exchange-traded products almost every day since January 7. Holdings totalled 1,511.8 tonne as of Tuesday, the highest since November 6, data show.