Gold prices went up in London on Tuesday, triggered by safe haven demand following a series of explosions in Brussels.
Spot gold was trading up 0.76% up at $1,252.90 a troy ounce in European morning trade.
Head of precious metals, Marex Spectron in London, David Govett said, “It does prove that gold is acting as a safe haven”.
Brussels’ airport and a central metro station were rocked by explosions on Tuesday morning. Belgium raised countrywide terror alert, as security was tightened across Europe. The explosions took place as European nations remain on high alert for terror attacks.
Mr. Govett said the metal initially rallied as much as $10 when news of the attacks broke, but the price of the metal has since come down slightly. Stock markets pared down their initial losses.
Gold had rallied in tandem with other safe haven assets, including 10-year German government bonds, the dollar and the yen, as travel and leisure stocks sunk.
Simona Gambarini, a commodities economist at Capital Economics in London, said Gold’s jump was “just a reaction on the back of heightened risk and uncertainty”. Aside from what’s happened today, it’s quite weak”, said Gambarini.
Mr. Govett said that with little economic data ahead of the Easter holiday, the market for the metal had otherwise been quiet this week.
Govett said, “Before this happened today, we were saying it feels like Easter holidays had come early”.
Market reactions to explosions and terror attacks are increasingly short lived; gold rallied on the first day of trading after Paris terror attacks last November, but the jump proved to be short lived and gold had fallen slightly by the end of the day.
Gold has rallied in recent weeks on the back of uncertainty over the timing of further rate increases by the US Federal Reserve, but last few days have seen pressure on the precious metal due to profit taking and a strong US dollar. A stronger dollar makes gold more expensive for investors who hold other currency, which pushes the prices down.
The WSJ Dollar Index, which measures the dollar against a basket of other currencies, was up 0.07% On Monday.
Ms. Gambarini said physical demand for the metal is also expected to stay weak in China and India, the metal’s major markets, at least until the end of the month.