Gold prices surged Thursday to their highest in two months, with the metal’s haven status in full force and attracting investment interest amid a sharp retreat for U.S. stocks that has infected foreign indexes.

Gold gained as global stock markets suffered from broad declines Thursday. Major U.S. stock indexes have so far failed Thursday to recover from Wednesday’s plunge.

The dollar, a key driver for the precious metals, weakened against its currency rivals. Another haven market, however, U.S. Treasury bonds — chief among culprits influencing rickety stock trading of late — drew their own fresh demand Thursday, halting for now the rise in yields that spooked stock investors. Bond prices and yields move inversely.

December gold

GCZ8, +2.55%

jumped $30.40, or 2.6%, to $1,223.80 an ounce, on track for the strongest finish since early August. December silver

SIZ8, +2.12%

 rose 29.4 cents, or nearly 2.1%, to $14.62 an ounce.

Read: Why gold prices may have already bottomed

Despite the size of gold’s gains Thursday, Michael Armbruster, managing partner at Altavest, said he’s not surprised by the rally “given what is going on with stocks and bonds.”

“Gold is a natural safe haven and has been very out of favor for a while,” he said. “I think we could see a rally to $1,300 at some point before year end.”

Because precious metals — often used as a haven by investors — don’t offer a yield, the commodity is vulnerable to a slump in a rising-rate environment. That climate also tends to lift the dollar, dimming the appeal of U.S.-priced gold to investors using other currencies. But stock markets are also vulnerable to rising bond yields and gold’s fortunes have been tethered to record-setting equities for much of this year.

“While it took a massive washout in equities and a moderate amount of economic anxiety, the safe haven lift in gold is justified given that the Dow Jones Industrial Average into the low this morning has posted a 24 hour decline of 1,300 points,” analysts at Zaner Precious Metals wrote in a daily note Thursday.

“At least for the time being, the gold market has tossed aside the fear of slackening physical demand and in a somewhat perverse way has embraced the hope for improved investment demand,” they said. Still, “we get the feeling that the bull camp will need a very high level of ongoing anxiety from declines in equity prices to facilitate a consistent flow of speculative buying into gold.”

On Thursday, the ICE U.S. dollar index

DXY, -0.28%

was down 0.4% at 95.168, though it remains more than 3% higher this year so far, contributing to a nearly 8% drop for gold over the same stretch. The yield on the U.S. 10-year Treasury note

TMUBMUSD10Y, +0.03%

 fell nearly 6 basis points to 3.165%.

Rising rates, reflected both in Federal Reserve policy and the bond market’s reflection of that policy, have been the major catalyst across financial markets. The Fed has already increased rates three times in 2018 and is expected to lift benchmark rates a fourth time in December, as well as continue its gradual tightening trend in 2019, according to the Fed’s own forecasts. Fed action drew fresh criticism from a campaigning President Donald Trump Wednesday night.

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