Gold Investors Seek Haven in Longest Fund-Buying Run in 3 Years

Gold Rises to Three-Month Highs
  • Metal in exchange-traded products increased for 11th day
  • Prices retreated after touching highest in three months

Investors are buying gold-backed funds in the longest stretch in more than three years, a sign bullion is regaining its role as a haven asset.

Assets in exchange-traded products backed by the metal have jumped more than 4 percent this year and are the highest since early November. Holdings have advanced for 11 straight sessions, the longest run since December 2012. Gold futures rose to a three-month high on Tuesday amid sagging equities and crude oil.

Demand for a store of value increased this year as China’s slowdown and volatile equities roiled global financial markets, prompting traders to push back expectations of when the Federal Reserve will next raise interest rates. Fed Vice Chairman Stanley Fischer said on Monday that it’s difficult to gauge the impact on the economy from market turbulence and uncertainty over China. 

“It looks like there’s some flight back into safety,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Gold is getting a nice bid as ETF holdings are near a three-month high.”

Gold futures for April delivery gained as much as 0.3 percent to $1,131.50 an ounce, the highest since Nov. 3, before closing little changed at $1,127.20 at 2:07 p.m. on the Comex in New York. Prices have climbed to near the 200-day moving average, a level last breached in October.

“Investor sentiment remains broadly risk-off, which is positive for gold,” Jonathan Butler, a precious metals strategist at Mitsubishi Corp. in London, said by e-mail. Investors may further increase ETP purchases if prices climb above the 200-day moving average, he said.

  • Holdings in gold-backed ETPs rose 12.8 metric tons as of Monday, the most since Dec. 18, to 1,529.1 tons, data compiled by Bloomberg show. Assets in SPDR Gold Trust, the world’s biggest bullion ETP, also climbed the most since mid-December.
  • Gold mining stocks fell, with an index of 14 producers tracked by Bloomberg Intelligence down 1.8 percent. Gold Fields Ltd. led declines.
  • Silver futures declined on the Comex, while platinum and palladium retreated on the New York Mercantile Exchange.
Before it's here, it's on the Bloomberg Terminal. LEARN MORE