Bulls Feeling Frayed as Gold’s First-Half Run Fades Into History

  • Metal near unchanged after strongest first half in 40 years
  • Volatility drops near lowest level since August 2015

Gold Prices Will Go Higher: Sprott's Rule

The gold market ain’t what it used to be.

After the best first half in 40 years and investors buying the metal at the fastest pace since 2009, prices have hardly budged since the end of June.

The 60-day volatility is near the lowest in more than a year and the amount of metal added to exchange-traded funds has slowed. Holdings backed by gold have climbed 4.1 percent this quarter after jumping 21 percent in the first three months of the year and 11 percent in the second.

“I’m still bullish, although feeling a little frayed at the edges,” said Andy Pfaff, chief investment officer for commodities at MitonOptimal Group in Cape Town. “We had this massive, impulsive bullish run at the start of the year, and that has corrected somewhat as the momentum faded. Looks like we have been in a consolidation range.”

With expectations of a U.S. interest-rate increase before the end of the year seen as more likely than not, the metal’s fan-base has shrunk.

For an explainer on how U.S. rates impact gold, click here

Bullion for immediate delivery slipped less than 0.1 percent to $1,321.20 an ounce at 2:55 p.m. in New York, according to Bloomberg generic pricing. Trading volume was below the 90-day average more than 80 percent of the time in the past two months. Earlier in the week, the gauge of volatility over the past sixty day fell to the lowest since August 2015.

On the Comex, gold futures for December delivery gained 0.2 percent to settle at $1,326 an ounce.

In other metal news:

  • Silver rose on the Comex, while palladium and platinum advanced on the New York Mercantile Exchange.
  • Holdings in ETFs backed by gold rose 0.51 metric ton to 2,032.2 tons on Wednesday.
  • Kirkland Lake Gold Inc. agreed to buy Newmarket Gold Inc. in a C$1.01 billion ($772 million) all-stock deal to add mines in Australia.
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