Gold hovers at $1235 levels, demand likely to remain boosted

Gold advanced by 2% to over $1,250 per troy ounce yesterday amid high risk aversion among market participants. Gold in terms of euro rose by 2% to €1,135 per troy ounce, recording a new ten-month high. The gold price increased as a result of downbeat U.S. economic data. U.S. Services PMI declined below the 50 mark again in February, a level last seen 2½ years ago. January new home sales also decreased drastically as compared to previous print. However, gold shed some of its gains as oil prices increased in the late afternoon session, while U.S. stock markets traded in the positive zone.  

In today's morning session, gold was steady at around $1,240. Gold demand has increased amid global growth slowdown and financial markets turbulence. Yesterday, Gold ETF recorded its tenth successive inflow, adding another 10 tons to the total holdings. ETF holdings have been increased by 215 tons since January and by 160 tons since beginning of February. Gold's demand is likely to increase as long as uncertainties prevail in the market, while oil prices and stock markets do not indicate upward trend.