Gold advanced for a fourth straight day, the longest rally in almost three months, as a selloff in equities and North Korea’s nuclear test boosted demand for a haven.
Meanwhile, the price of Brent crude dropped to an 11-year low after crude supplies at a US hub rose to a record and oil fell up to 5.9% in London.
Supplies in Cushing in Oklahoma, the delivery point for West Texas Intermediate crude, climbed to an all-time high of 63.9m barrels.
US petrol stockpiles surged while nationwide crude inventories dropped.
Global equities and commodities slid after China’s central bank reduced the yuan’s value, a reminder of the depreciation in August that sparked a wave of financial-market turmoil.
Oil prices have shrugged off rising tension between Iran and Saudi Arabia as supplies continue to outstrip demand.
Analysts from Citigroup to UBS Group predict crude may approach $30 in the coming months, while US inventories remain more than 130m barrels above the five-year seasonal average.
Bullion reached the highest in seven weeks as stock markets around the world retreated and North Korea said it detonated its first hydrogen bomb at an underground site in the far northeast.
The atomic-test claims add to investor concerns spurred by Saudi Arabia-Iran tensions and China’s stockmarket rout earlier this week that had already boosted gold’s appeal as a store of value.
“This is a fear trade,” Michael Smith, the president of T&K Futures & Options in Florida, said.
“People are taking this one very seriously,” he said.
Gold, which fell for a third straight year in 2015 as US equities rose and the Federal Reserve signalled interest-rate increases, rose above its 50-day moving average yesterday for the first time since early November.
Newmont Mining, the biggest US gold producer, defied the selloff in equities, rallying 1.8%, among the best performances on the Standard & Poor’s 500 Index.
Gold futures for February delivery advanced 0.8% to $1,087.30 an ounce at one stage on the Comex in New York, after hitting $1,092.60, the highest for a most-active contract since November 16.
The gain would mark the longest winning streak for futures since October 15.
The climb above the 50-day average, a level often watched by traders and analysts who study chart patterns, may further improve trading sentiment.
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