Gold prices posted the biggest weekly gain in 18 months as turmoil in European currency markets spurred demand for the metal as a haven.
Aggregate open interest in gold futures on Jan. 15 surged 5.6 percent, the most since October 2009, following the Swiss central bank’s surprise move to abandon the franc’s cap against the euro. Assets in the biggest exchange-traded product backed by the metal rose the most since August 2011.
Gold climbed to a four-month high on Friday, while call options for the right to own February futures at $1,300 an ounce soared sevenfold in two days. 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 delay an increases in interest rates.
“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, the 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 1 percent to settle at $1,276.90 an ounce at 1:38 p.m. on the Comex in New York. Earlier, the price reached $1,282.40, the highest for a most-active contract since Sept. 2. This week, the metal jumped 5 percent, the most since July 12, 2013.
Aggregate futures trading was 45 percent above the 100-day average for this time of day, data compiled by Bloomberg show. The dollar rose to the strongest in 11 years against the euro on the fallout from the Swiss central bank’s move.
Traders and analysts surveyed by Bloomberg were bullish on gold for the seventh straight week. In 2015, gold has climbed 7.8 percent, the biggest gain to start a year since 1986.
Commodity prices are close 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, the top ETP, rose 1.4 percent to 717.15 metric tons on Jan. 15. Holdings in global products climbed 12.5 tons, the most since September 2012, to 1,608.1 tons, data compiled by Bloomberg show. The amount on Jan. 14 touched the lowest since 2009.
Silver futures for March delivery gained 3.8 percent to $17.75 an ounce, the biggest gain since Dec. 9. The price reached $17.865, the highest since Sept. 24. This week, the metal jumped 8.1 percent, the most since Aug. 16, 2013.
On the New York Mercantile Exchange, platinum futures for April delivery advanced 0.5 percent to $1,269.40 an ounce. This week, the price climbed 3.2 percent, the most since Feb. 14.
Palladium futures for March delivery dropped 1.6 percent to $754.30 an ounce. In three days, the price slumped 7.5 percent, the most since Oct. 23, 2012. Trading on Friday was 63 percent more than the 100-day average, according to Bloomberg data.