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Gold advanced to the highest level in almost five months as precious metals climbed on demand for a haven, amid concerns that the global economic growth is slowing.
The International Monetary Fund made the steepest cut to its global growth forecast in three years in an outlook released late Monday in Washington. It said slowing growth almost everywhere, except the US, will more than offset the boost to expansion from the slump in oil prices.
Bullion jumped last week by the most since August 2013, after the Swiss National Bank ended the franc's cap against the euro and deepened negative interest rates, roiling markets. The European Central Bank might announce asset purchases on Thursday before a Greek election three days later that's spurred concern the country could exit the currency bloc.
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"All these factors are coming together and leading to safe-haven buying in gold," Jonathan Butler, a precious metals strategist at Mitsubishi Corp said by phone. "There's an element of apprehension about what the ECB will come up with. No one wants to be on the wrong side of it when it eventually announces quantitative easing."
Bullion for immediate delivery rose as much as 1.5 per cent to $1,294.26 an ounce, the highest since August 28, and was at $1,292.44 by 10:13 am in London, according to Bloomberg generic pricing. Gold for February delivery climbed 1.2 per cent to $1,292.50 on the Comex.
