Gold Prices Rally as Traders Seek Haven From Falling Stocks

24-Sep (Wall Street Journal) — Gold prices surged higher on Thursday as some investors sought to gird themselves from disappointing economic data and declines in U.S. stocks by purchasing the haven asset.

The most actively traded contract, for December delivery, recently was up $22.90, or 2%, at $1,154.40 a troy ounce on the Comex division of the New York Mercantile Exchange.

Investors started tiptoeing into the gold market at the start of the U.S. trading day after Commerce Department data showed U.S. durable goods orders fell a seasonally adjusted 2.0% in August from a month earlier. The data suggest that the strong dollar and economic weakness overseas may be sapping demand for U.S. goods.

Gold’s gains accelerated after the U.S. stock market fell at the open, spurring some investors to seek safety in the precious metal. The S&P 500 stocks index was recently down 1.1% at 1917.56. Gold often benefits from losses in riskier assets like stocks as some investors buy the precious metal on the hope that it will keep its value better during a period of economic turbulence.

“With the pullback in equities, there’s definitely a flight to quality (assets) right now, it’s going into Treasurys and to gold,” said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.

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PG View: The “flight to quality” is an important concept that really knows no season. Having ‘quality’ assets is always important, so you should always have some physical gold in your portfolio.