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Even after bullion’s best start to a year since at least 1975, investors are positioning themselves for more gains. Money managers increased their wagers on a price rally to the highest since 2012, taking their optimism to a level last seen before a three-year bear market started.
The metal has jumped 16 percent this year. Federal Reserve officials are cautious about raising U.S. interest rates amid persistent risks facing the global outlook. Investors are snapping up bullion as the shaky economy picture spurs haven demand, while low borrowing costs keep the metal competitive against interest-bearing assets.
“There’s a lot of fundamental uncertainty out there, and of course gold has long-term stability,” said John Crumb, the chief strategy officer who helps oversee $1.7 billion at investment firm GoldMoney in Vancouver. “The upside is still greater than the downside.”
The net-long position in gold futures and options jumped 13 percent to 184,218 contracts in the week ended April 12, according to Commodity Futures Trading Commission data released three days later. That’s the highest since October 2012.
"There is a little bit of safe haven buying. But there are concerns about (U.S.) interest rate hikes. That tug of war is keeping prices in range," said Ronald Leung, chief dealer, Lee Cheong Gold Dealers, Hong Kong.
Physical demand is soft and is unable to support rallies, he said.
Reference: Reuters, Bloomberg
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