As stocks tank, gold price enjoys longest winning streak since 2012

The price of gold added to yesterday's strong gains on Friday, jumping to a high above $1,270 an ounce amid widespread carnage on financial markets.

Up five weeks in a row; it is the yellow metal's longest weekly winning streak since September 2012. Gold is trading 5% higher year to date.

In lunchtime trade on the Comex market in New York, February gold futures had given up most of the early gains to change hands at $1,263.80 up slightly from yesterday's close after hitting a high for the day of $1,273.20 around 10am EST.

Volume was brisk and by 1pm EST, volume traded in February gold, the most active future, reached 132,000, contracts compared average daily volumes on the exchange of less than 160,000. Trading in gold for delivery in April was also up at some 28,000 contracts at a price of $1,264 an ounce.

Gold was finding favour on Friday as a safe haven asset as the US dollar slid, stock markets tanked and bond yields dropped. Mining stocks were not spared and the S&P/TSX Global Mining Index lost 2.6% in value, wiping out recent gains.

Gold's 28% price drop in 2013 were marked by a rotation out of gold-backed ETFs into riskier assets like equities, prompting many to speculate that gold's reputation as a hard asset and storer of wealth were something of the past.

Friday's action suggested gold's safe haven status is not as tarnished as some would have it.

The destruction on stock markets were caused by fears of an emerging market crisis after manufacturing numbers from China showed a surprising contraction.

China dominates the global trade in just about every commodity including iron ore (representing 70% of world trade), copper(42%), coal (47%), nickel (36%), lead (44%) and zinc (41%).

A slowdown in Chinese metal and mineral imports will have a knock-on effect on other resource-dependent countries like Brazil and other Latin American economies, South Africa, Australia and Canada, which have all seen their currencies retreat sharply in 2014.

Gold's gains on Thursday came after news that Sonia Gandhi, leader of India's Congress party and ruling alliance, had asked the Indian government to relax gold import curbs ahead of parliamentary elections later this year reports the Times of India.

Long the top importer of gold, India fell behind China in 2013 after bullion import duties were pushed up tenfold – from 1% at the start of 2012 to 10% – and other rules such as strictly cash only for imports, mandatory re-export of 20% of imports and transaction taxes stymied India's gold industry.

Despite the fact that premiums over the London fix demanded by Indian gold traders from jewelers shot up as high as $140 an ounce, according to the closely watched Thomson Reuters GFMS gold survey released yesterday, Indian consumption still rose 5% to 987.2 tonnes last year.

Lifting the restrictions, which will be made easier by gains for the rupee from historic lows set last year and an improving balance of payments, could unleash this pent up demand.

Image of Wall Street traders September 2008 by thetaxhaven