Gold at Two-Month High on Haven Demand as Bullion Miners Rally

Gold Is Back in Fashion, Here's Why
  • Holdings in bullion-backed ETFs reach highest since November
  • Index of producer shares gains for fifth straight day

Gold surged to a two-month high as more declines in Asian equities boosted demand for a haven and prompted traders to push back bets on when the Federal Reserve will next raise U.S. interest rates.

Bullion, which is this month’s best performing metal, advanced as much as 1.6 percent as Chinese equities tumbled to a 13-month low. Investors raised holdings in gold-backed funds to the highest since November. The 30-member Philadelphia Stock Exchange Gold & Silver Index of shares rose for a fifth session, the longest streak in a month.

Worries over the global economy mean U.S. policy makers will probably be slower to raise borrowing costs. Lower rates benefit gold because the metal doesn’t pay interest. There’s now a 22 percent chance the Fed will increase rates by March, down from 51 percent at the start of the year, data compiled by Bloomberg show. Traders see no chance of a move at the two-day meeting starting Tuesday.

“A lot of the demise of Asian stock markets might help gold,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “The premonition that four rate hikes are supposed to happen in 2016 are dwindling down to two or maybe one rate hike, and that’s giving gold a boost.”

Gold futures for April delivery gained 1.4 percent to settle at $1,120.60 an ounce at 1:42 p.m. on the Comex in New York. The metal touched $1,123.60, the highest since early November.

Primero Mining Corp. of Vancouver and Billings, Montana-based Stillwater Mining Co. were among the best performers on the 30-member index of shares. 

  • Gold holdings in exchange-traded products rose 0.5 metric ton to 1,503.5 tons as of Monday, data compiled by Bloomberg show. Assets gained for a sixth session in the longest run since April.

  • Silver futures for March delivery rose 2.2 percent to $14.564 on the Comex. On the New York Mercantile Exchange, platinum and palladium advanced.
Before it's here, it's on the Bloomberg Terminal. LEARN MORE