Gold edged higher on Thursday as strong inflows into gold-backed funds increased optimism the metal could extend this year’s rally despite a revival in risk appetite that lifted Asian equities to a two-month high.
Gold, which has gained nearly 17 percent this year to be among the top performing commodities, was trading not far below a one-year peak.
Spot gold was up 0.1 percent at $1,241.40 an ounce by 0655 GMT, after rising 0.7 percent on Wednesday. The metal hit a one-year high of $1,260.60 on Feb. 11 as uncertainty in the global economy sharpened investor demand for safe havens.
Michael McCarthy, chief market strategist at CMC Markets, said he was a bit surprised that gold had risen overnight given the shift back to risky assets, adding that the continued flows into gold-backed exchange-traded funds (ETFs) provided support.
Holdings of SPDR Gold Trust, the world’s largest gold-backed ETF, rose to 25.35 million ounces on Wednesday, the most since September 2014.
But McCarthy warned gold could come under pressure as global risk appetite increases.
“It’s clear from the selling of bonds that the safe haven aspect of the investment market is less desirable than it was a few days ago,” he said.
U.S. gold for April delivery was unchanged at $1,242.30 an ounce.
BMI Research, part of Fitch Ratings, said it raised its 2016 gold price forecast to $1,150 from $1,000 in early February.
“A recalibration of expectations for the global monetary policy trajectory by investors and additional equity market weakness will combine to create a more positive environment for gold prices than we previously anticipated,” BMI said in a report.
Still, Asian shares and oil prices climbed on Thursday after a report showed U.S. private-sector jobs rose 214,000 in February, beating market forecasts and lifting expectations for the more comprehensive U.S. non-farm payrolls due out on Friday.
U.S. non-farm payrolls, which include both public and private-sector employment, are estimated to have risen by 190,000 last month after increasing by 151,000 in January, according to a Reuters poll of economists.
“There is likelihood of positive surprise on Friday and that will also add to the weight on gold,” said McCarthy.
Spot palladium was flat at $514.75 an ounce while platinum gained 0.5 percent to $936 and silver rose 0.3 percent to $14.97.