Gold Investors in Longest Fund-Buying Spree in a Year Before Fed

  • ETP holdings gained past seven days to highest since November
  • Prices near two-month high as U.S. rate expectations ease

Investors bought gold through funds for a seventh day, the longest stretch in a year, before a Federal Reserve statement which may give clues on the pace of U.S. interest-rate increases.

Bullion, this month’s best performing metal, was near a two-month high before the central bank ends a two-day meeting. Concerns over the strength of the global economy have boosted demand for haven assets and prompted investors to push back expectations of when the Fed will next raise borrowing costs. Holdings in gold-backed funds have climbed to the highest since November.

There’s no chance the Fed will raise rates at the conclusion of today’s meeting, and the probability rises to 27 percent for March, which is down from 51 percent at the beginning of the year, data compiled by Bloomberg show. Gold is on pace for its biggest monthly gain in a year amid tumult in Chinese stocks and the worst start for U.S. equities since 2009.

“The Fed will probably come out and acknowledge that there’s been a little turmoil in the financial markets and that it’s monitoring problems overseas in China and Europe,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “So I think gold will tick up with that.”

Gold futures for April delivery lost 0.4 percent to $1,116.50 an ounce at 11:02 a.m. on the Comex in New York. It reached a two-month high on Tuesday and is up 5.3 percent this year.

  • Holdings in exchange-traded products backed by gold rose 8.6 metric tons to 1,512.2 tons as of Tuesday, data compiled by Bloomberg show.

  • Concerns about a weaker yuan, a relatively low gold price and the upcoming New Year festival in China have boosted appetite for the metal in the country, Commerzbank AG said in a report. China’s imports of gold from Hong Kong surged to the highest in two years in December.

  • Silver futures for March delivery fell on the Comex. On the New York Mercantile Exchange, platinum and palladium gained.
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