It was a great day for gold bugs, with the December futures contract on the Comex division of the New York Mercantile Exchange closing at a seven-month high of $1,780.50 (U.S.) an ounce. That was up $26.90, or 1.5 per cent, on the day.
The metal extended gains from earlier in the session as traders focused on speculation that China may unleash more stimulus measures to spur stronger growth in its economy.
China's central bank had injected a record amount of cash this week, which spurred talk it was preparing to take more aggressive measures as the nation's growth rates continue to slow down.
Meanwhile, Spain's tough new measures to cut spending in its 2013 budget also fuelled concerns over the global economic growth picture today. Nervousness in the euro zone has supported gold prices in recent sessions, particularly given it suggests central banks could be looking at further stimulative measures. That could eventually lead to inflationary pressures.
Strikes in South Africa are also encouraging some buying of the metal given the possible impact on supplies. The strikes have affected AngloGold Ashanti Ltd. and Gold Fields Ltd.
Not surprisingly, gold equities on the TSX are seeing good gains today. Barrick Gold at mid-afternoon was up 1.2 per cent at $40.80, and the materials sector was up 2 per cent, the top performer.