Gold Tops $1,200 for First Time Since June on Economic Woesby
Producer shares jump; index of companies up as much as 6.2%
Investors add to bullion holdings in exchange-traded products
The economic woes sparking turmoil for global equities is a boon for gold, with prices trading above $1,200 an ounce for the first time since June.
Spot bullion climbed as much as 2.3 percent, the biggest intraday gain in two months. Shares of precious-metal producers surged. The 30-company Philadelphia Stock Exchange Gold & Silver Index of shares rose as much as 6.2 percent. Newmont Mining Corp. was the third-biggest gainer among stocks tracked by the Standard & Poor’s 500 Index.
Gold is the best asset in the Bloomberg Commodity Index this year, rising 13 percent. The metal is also benefiting from losses in global equity markets. U.S. shares retreated on Monday, joining a tumble in European and emerging-market stocks.
“Gold’s on the move today,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “A sharp selloff in equities is further causing a flight to quality and it shows you China is a lot shakier than last week.”
Bullion for immediate delivery added 1.9 percent to $1,195.40 an ounce at 2:51 p.m. in New York, according to Bloomberg generic pricing. Prices touched $1,200.97, the highest since June 22.
A global slowdown has increased speculation that U.S. growth will cool enough to force Federal Reserve policy makers to wait longer before raising interest rates again. The prospect of delays sent the dollar lower and gave metals a boost as alternative investments. Bullion holdings in exchange-traded products have climbed for 15 consecutive days, the longest run since September 2012, according to data compiled by Bloomberg.
Since the start of the year, investors added $2.6 billion to U.S. exchange-traded funds linked to precious metals, according to data compiled by Bloomberg. That follows a withdrawal of $2.7 billion in 2015, when bullion posted a third straight annual loss. The metal is “in the process of bottoming out,” analysts at Bank of America Merrill Lynch wrote in a Feb. 5 report.
Shares of Newmont rose as much as 6.3 percent to $25.94, heading for a fourth straight increase. Kinross Gold Corp. climbed as much as 13 percent in Toronto.
“Newmont, I think, in particular benefits from being in really good shape and having the gold price tailwind help it out,” Christopher LaFemina, an analyst at Jefferies LLC, said by telephone from New York. “‘Newmont stands out to me as being relatively cheap, good free-cash flow, relatively low operational risk and a good, strong balance sheet.”