Gold higher after World Bank downgrade

Gold is trading near a two-week high as traders seek a lower risk investment.

Golf ingots
Source: Bloomberg

Gold is trading at $1262, up 0.2% on the day after the World Bank lowered its economic outlook for 2014, cutting the growth rate to 2.8% from 3.2%. This week has been quiet in terms of newsflow, and last week’s European Central Bank interest rate cut and US jobs report have left traders wondering what to focus on.

Equity markets have enjoyed a good run recently, however dealers are now taking their cash out of stocks and moving them into gold. The downgrade by the World Bank has accelerated the rally in gold, and Alastair McCaig noted the precious metal had already been in demand over the past few trading sessions.

Global equity markets are edging away from their recent highs, and a lack of positive news could lead to a growing risk-off strategy which could benefit gold. As Alastair McCaig stated, gold is receiving support at $1240 and the flight to quality effect could push it towards $1287.

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