Gold Climbs to Four-Month High as Open Interest Surges

New York (Jan 16)  Gold prices jumped to the highest since September after holdings in New York contracts gained by the most in five years.

Aggregate open interest in gold futures climbed by 5.6 percent on Jan. 15, the most since October 2009. The Swiss central bank’s surprise move to abandon the franc’s cap against the euro sent investors to the metal as a haven from swings in currency markets. Assets in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, rose by the most since August 2011.

Prices are up 4.8 percent this week, set for the biggest advance since July 2013. Signs of cooling expansion in Europe boosted speculation that policy makers will add to stimulus, increasing demand for a store of value. Muted inflation and stagnant foreign economies may prompt the Federal Reserve to wait longer before raising interest rates.

The Rise and Fall of Gold »

“There’s a lot more uncertainty in Europe and the U.S., and that’s piqued a lot of investors’ interest in gold,” Fain Shaffer, president at Infinity Trading Corp. in Indianapolis, said in a telephone interview. “Rising open interest is bullish for gold and means that traders feel gold is going to move higher over the short term.”

Gold futures for February delivery rose 0.8 percent to $1,274.80 an ounce at 10:51 a.m. on the Comex in New York, after touching $1,279, the highest since Sept. 4.

Trading was 57 percent above the 100-day average for this time of day, data compiled by Bloomberg show.

Traders Bullish

Traders and analysts surveyed by Bloomberg were bullish on gold for a seventh week. Prices are up 7.7 percent since Dec. 31, the best start to a year since 1986.

Commodity prices are near a 12-year low amid a plunge in oil, lowering inflation expectations and raising the risk of deflation. That may prompt U.S. policy makers to delay rate increases. Americans’ cost of living declined in December by the most in six years, government data show.

Assets in the SPDR Gold Trust rose 1.4 percent to 717.15 metric tons on Jan. 15. Holdings in global ETPs climbed 12.5 tons, the most since September 2012, to 1,608.1 tons, data compiled by Bloomberg show. The amount reached the lowest since 2009 on Jan. 14.

Silver futures for March delivery gained 2.6 percent to $17.545 an ounce, after touching $17.625, the highest since Oct. 21.

Source: Bloombverg