Gold surges as equity plunge boosts safe-haven appeal

Gold futures on the COMEX division of the New York Mercantile Exchange rose more than one percent on Monday, as the Dow had lost more that 900 points amid rising concerns over trade tensions between the United States and China.

The most active gold contract for December went up 19 dollars, or 1.3 percent, to settle at 1,476.5 dollars per ounce.

[File photo: IC]

The U.S. stock benchmark indexes slipped more than 3 percent on Monday as investors dumped risky stocks for safe haven assets, such as gold.

The Dow Jones Industrial Average used to plunge more than 900 points on Monday. The S&P 500 and Nasdaq Composite Index followed Dow's plunge.

When equities post sharp losses, the precious metal usually gains significantly, as investors have to look for a safe haven.

A weakening U.S. dollar also supported gold futures.

The U.S. dollar index, a measure of the greenback against a basket of other major currencies, retreated 0.6 percent to 97.48 shortly before the gold's settlement.

Gold and the dollar typically move in opposite directions. When the dollar goes down, gold futures will rise as gold, priced in the dollar, becomes less expensive for investors holding other currencies.

U.S. President Donald Trump tweeted last week to threaten imposing an additional 10 percent tariff on the remaining 300 billion U.S. dollars worth of Chinese imports starting on Sept. 1.

The unexpected move triggered fear among market participants, who have become increasingly concerned over escalation of U.S.-China trade tensions.

As a result, December gold rose 1.75 percent last Friday. Monday was the second consecutive session with more than one percent increase in gold futures.

As for other precious metals, September silver went up 12.3 cents, or 0.76 to close at 16.393 dollars per ounce. The October platinum rose 4.90 dollars, or 0.57 percent, to settle at 857.90 dollars per ounce.