Gold price soars to the highest level since 2015 as heightened economic and geopolitical uncertainties drove investors to seek refuge in the precious metal.
During Thursday trading, gold futures surged 5.2% to $1,256.70 a troy ounce on the New York Mercantile Exchange. This significant movement of gold price is the biggest one-day percentage gain since March 2009. In addition, Gold has increased 16% since the first day of the year amid continued turmoil in global financial markets and diminished expectations for rate increases in the U.S.
Traders said financial instability fears were fueled by European bank shares slumping to multi-year lows, with worries mounting over banks' profitability in a low-growth and low-interest rate environment.
"The safe-haven seekers are moving back. We recommend clients add gold to their portfolios as insurance, if things turn out really bad, there will be much more upside," said Julius Baer analyst Carsten Menke.
"Look at the massive inflows into ETFs (Exchange Traded Funds) this year. They put the price recovery on a much more solid footing than any of the other recoveries we've seen over the past couple of years."
The selloff in U.S. stock markets pushing investors to precious metal. On Thursday, the Dow Jones Industrial Average down 1.6% to 15,660.18. The S&P 500 decreased 1.23% to 1,829.08, and the Nasdaq Composite dropped 0.39% to 4,266.84.
Moreover, Investors were also nervous after Federal Reserve Chairwoman Janet Yellen highlighted risks to growth and inflation on Wednesday, but delivered a less dovish tone on interest rates than many investors had hoped for. However, on Thursday, Janet Yellen said the U.S. central bank is studying the feasibility of pushing short-term interest rates into negative territory should it need to give the economy a stronger boost.