Gold rose for a fifth day in a row as the dollar came under more pressure after weak retail sales data and a shock profit warning from Walmart.
Investors bought into gold as commentators suggested the Federal Reserve is in no rush to raise interest rates.
Indeed, there were even suggestions that the Fed’s next move may be to lower rates further if the economic backdrop does not improve.
US retail sales for September were lower than expected, rising by just 0.1%, while wholesale prices also fell.
Commerzbank said: “In response, the expectations of a rate hike this year have dropped to just 25% according to the Fed Fund Futures.”
The Fed Fund Futures is a guide used to determine the likelihood of a Fed interest rate hike.
The news led to further falls for the US dollar, which is now at a seven-week low.
This “clearly increased the appeal of gold, which, in a volatile investment environment, is clearly benefitting from its safe-haven attractions” Charles Stanley added.
The gold price has now moved back above its 200-day moving average, suggesting “a dramatic shift in sentiment could be underway”.
Commerzbank said: “This doubtless sparked technical follow-up buying which further strengthened the price rise.”
Gold was US$6 higher today to US$1,186.
“A close above US$1,200 would, as a result, look pretty bullish” Charles Stanley said.
According to data, the 14-day relative strength index shows a reading of 69%. In recent weeks, if this figure has gone over 70%, gold has been sold as investors believe to be overbought.
“What makes the current situation interesting is the question of whether this price action is marking the end of a powerful long-term move to the downside,” Charles Stanley added.
Elsewhere, silver was up a quarter of a per cent to US$16.1 while platinum eased US$2 to US$995.
Major Movers
Randgold Resources (LON:RRS) flat at 4,490p
Fresnillo (LON:FRES) up 4p to 754p
Anglo American (LON:AAL) down 5p to 675p