Investing.com - Gold futures jumped to the highest level in almost three months in Europe trade on Tuesday, as retreating oil prices and steep declines in global equity markets underpinned demand for assets perceived as safer.
Gold for February delivery on the Comex division of the New York Mercantile Exchange rallied $9.40, or 0.85%, to trade at $1,114.70 a troy ounce by 9:50GMT, or 4:50AM ET. It earlier rose to $1,118.00, the most since November 4. On Monday, gold tacked on $9.00, or 0.82%.
Market sentiment was hit as fresh falls in oil prices, which slid back below $30 per barrel, and a late selloff in Chinese stock markets overnight added to fears over the outlook for global economic growth.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, touched lows of 99.19 and was last at 99.37, as investors looked ahead to the Federal Reserve's two-day monetary policy meeting due to begin later in the day.
The Fed is widely expected to keep interest rates on hold at the conclusion of its meeting on Wednesday after hiking rates for the first time in almost a decade in December.
Investors were looking to the Fed policy statement for any indication that the bank is considering slowing the path of interest rate increases this year after recent global financial market turmoil.
A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Prices of the precious metal are up 5% so far this year as investors sought refuge from turmoil in global equity markets. Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Also on the Comex, silver futures for March delivery inched up 9.1 cents, or 0.64%, to trade at $14.34 a troy ounce during morning hours in London, the highest since December 7.
Elsewhere in metals trading, copper edged lower as ongoing worries over global economic growth weighed. Losses were limited amid expectations for fresh central bank stimulus in Europe and Japan.
Copper is down nearly 6% so far this year as investors slashed holdings of the red metal amid persistent worries over an economic slowdown in China. The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.