Gold Price Heads for Biggest Gains in Two Weeks as Stocks, Oil Drop
New York (Feb 24) Gold futures headed for the biggest gain in almost two weeks as global equities and crude oil retreated, boosting demand for haven assets. Investors increased holdings in funds backed by the precious metal for a ninth day, building their stake at the fastest pace in seven years.
European shares dropped the most in two weeks and U.S. stocks sank. Crude fell through $31 a barrel in New York, after retreating last session. A report from the International Monetary Fund on Tuesday showed central banks including Kazakhstan and Russia expanding bullion holdings.
Gold is up more than 17 percent in 2016 as volatility in financial markets and concern over global economic growth has reduced bets that the U.S. Federal Reserve will increase interest rates this year, boosting the metal’s appeal as a store of value. Bullion may rally to as high as $1,400 an ounce from about $1,245 on Wednesday should risk aversion intensify, according to Barnabas Gan, an Oversea-Chinese Banking Corp. economist and the top-ranked precious metals forecaster.
“The lack of risk appetite in the first months of the year has been good for the gold price,” Jens Pedersen, a Danske Bank A/S analyst in Copenhagen, said by e-mail. “The flight to ETFs has been driven by growth concerns, Fed repricing, confusing Chinese FX policy and looming risk of deteriorating geopolitical situation in the Middle East.”
Gold futures for April delivery advanced 1.9 percent to $1,245.50 an ounce at 9:35 a.m. on the Comex in New York. A close at that price would mark the biggest gain since Feb. 11.
Investors were net buyers of exchange-traded funds on all but five days this year, data compiled by Bloomberg showed as of Tuesday.
“Weaker world equities markets have been bullish for gold recently,” Jim Wyckoff, a senior analyst at Kitco Metals Inc., a research company in Montreal, said in a report.
* Holdings in bullion backed exchange-traded products rose 0.9 metric ton to 1,666.15 tons on Tuesday. That’s the highest level since March 2015 and an increase of 14 percent for the best start to a year since 2009.
* Gold volumes traded on the Comex in New York were 53 percent above the 100-day average for the time of day. Silver trading was more than double the normal amount.
* Silver futures rose on the Comex, while palladium fell and platinum advanced on the New York Mercantile Exchange.
Source: Bloomberg
