Free commodity tips - Gold futures rallied by almost 2 per cent in the domestic market on Wednesday, whilst logging their best finish in almost two weeks overseas as plunging oil prices caused a sharp sell-off in global equities, prompting a flight to the safety of the precious metal.

Stock markets from Asia to Europe and the US nosedived as oil fell below USD 27 per barrel to a 13-year low after the IEA warned of a worsening supply glut, and as the IMF lowered its global growth outlook amidst a commodity rout, faltering Chinese economy and rising US borrowing costs, forcing investors to shun risky assets, and boosting the safe haven demand for the bullion. Weakness in equities bolstered the appeal of Gold as an alternative asset.

Tepid US inflation data also pared back bets of a further hike in US interest rates in the coming months, bolstering the lure for the bullion as a store of value. US consumer prices declined 0.1 per cent in December after being little changed in November, amidst a commodity slump.

Gold may retreat today as traders stay cautious ahead of key US economic data including manufacturing, leading index and existing home sales.Gold climbed to the highest this week and investors boosted holdings in bullion-backed funds as global market turmoil spurred demand for a haven.The metal rose as much as 0.9% in London as most commodities dropped and a gauge of world equities was on the brink of entering a bear market. Citigroup raised its forecast for gold prices this year and said the metal's role as a haven is back in vogue, while cutting the outlook for crude oil and base metals.

"The weakness in the global economy is causing people to rethink the likely path the Fed will take in tightening, and they're now pricing one interest rate increase later in the year, rather than several." Bullion for immediate delivery gained 0.7% to $1,095.01 an ounce by 11:13 a.m. in London, according to Bloomberg generic pricing. It's the best-performing metal so far this month, with a gain of 3.2%. Citigroup raised its 2016 forecast by 7.5% to $1,070, it said in a report.

Investors bought gold through exchange-traded products almost every day since January 7. Holdings totalled 1,511.8 tonne as of Tuesday, the highest since November 6, data show.


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