Demand for Gold Rises

Despite the US rate hike in December 2015, safe haven demand for gold (which has zero yield) rose sharply in the first two months of 2016 alongside global financial turmoil and steep emerging market currency corrections. Gold purchases by central banks have risen, partly because of efforts to reduce their exposure to FX volatility and negative rates in Europe and Japan. Uncertainties surrounding the growth outlook for China and the wider Asia area, as well as commodity and currency risks offer near term gold price support.

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