Gold Gives Bugs Best Half in 40 Years as Brexit Highlights Risks

  • Comex gold volume reached a record high in first half of year
  • Investors buy most ETF gold in first two quarters since 2009

The world’s a scarier place for investors these days and many are turning to gold, with the metal rallying in the first half more than in any year since 1974.

Market turmoil after a U.K. vote to leave the European Union adds to concerns over growth around the world, including China, that have pushed gold prices up 24 percent this year. Investors piled into exchange-traded funds backed by the metal and futures volume hit a record.

Prospects of a further U.S. interest-rate increase have been wound back since the populist Brexit vote, which has only added to a sense of uncertainty over U.S. elections this year.

“The U.S. won’t raise rates because there’s too much open uncertainty after the Brexit vote,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “People are more interested in diversifying into precious metals, and now more than ever. This contends with some of the great crises I’ve seen in my career.”

Gold for immediate delivery was set for a second straight quarterly gain, rising 6.9 percent in the three months ending Thursday to $1,317.95 an ounce as of 1:47 p.m. in New York, according to Bloomberg generic pricing. The metal jumped to the highest in more than two years on June 24 after the Brexit vote.

Surging prices after the U.K. result deals a blow to demand in India, the second-largest consumer, and may cut imports to the lowest in seven years, according to Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation.

Global investor demand remains strong.

Holdings in gold-backed ETFs rose 7.6 tons to 1,947.9 tons on Wednesday, the highest since September 2013. They have jumped 33 percent this year, the biggest first-half increase since 2009. Investors traded 28.7 million futures contracts on the Comex, the busiest first quarter on record, data compiled by Bloomberg show.

In other metals:

  • Gold futures for August delivery slid 0.5 percent to settle at $1,320.60 on the Comex in New York.
  • Silver futures for September delivery climbed 1.2 percent to $18.623 an ounce, gaining for the fifth time in six trading sessions.
  • On the New York Mercantile Exchange, platinum and palladium gained.
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