Posted by Francis Koh on 06 May 2015

Gold extends gains on sluggish U.S. data, safe-haven demand

Spot gold rose 0.3 percent to $1,196.36 an ounce by 0346 GMT, bringing it near the key $1,200 level. A variety of other factors, including a surge in oil prices and a slide in global equity markets, also supported demand for safe-haven bullion. "The firm oil price and the widening U.S. trade gap provided support for gold, with the key nonfarm payrolls this Friday likely to be the next major catalyst," said Jason Cerisola, a trader at MKS Group.

A customer looks at gold ornaments on display inside a jewelry showroom on the occasion of Akshaya Tritiya, a major gold buying festival, in the southern Indian city of Kochi April 21, 2015. REUTERS/Sivaram V  

Higher oil prices - Brent hit a 2015 high on Wednesday - boost demand for gold, which is seen as a hedge against oil-led inflation.

Asian stocks stumbled on Wednesday in sympathy with weak U.S. and European markets as investors were spooked by a vicious selloff in sovereign bonds globally.

The dollar came under pressure as well after disappointing U.S. trade data for March painted a bleaker economic picture of the first quarter.

Data on Tuesday showed the U.S. trade deficit jumped 43.1 percent to $51.4 billion in March, the largest since October 2008. Other data showed activity in the services sector accelerated to a five-month high in April. The sluggish data added to the view that the Fed will not raise interest rates at a policy meet in June, a factor that could boost demand for bullion, a non-interest-paying asset.

Read More: http://in.reuters.com/article/2015/05/06/markets-precious-idINKBN0NR01P20150506