Gold climbed to the highest in a year as investors sought a haven from tumbling stock markets after Federal Reserve Chair Janet Yellen suggested the central bank may delay raising interest rates.
The metal jumped as much as 3.8 percent to $1,242.26 an ounce, the highest since February 2015. Bullion has gained 16 percent this year, making it the best-performing commodity. Shares of producers rallied on Thursday, with Gold Fields Ltd. and AngloGold Ashanti Ltd. jumping more than 12 percent.
“People are bullish gold because they have no idea where else they can put their money,” said Bernard Sin, the head of currency and metal trading at MKS (Switzerland) SA, a Geneva- based refiner. “We’re seeing a lot of hot money coming into the market, and there’s interest from a lot of new players. The rally could have legs if that continues.”
The outlook for U.S. interest rates to stay low has boosted gold’s appeal because it doesn’t pay interest like some other assets. Investors are piling into funds backed my the metal at the fastest pace in seven years.
Gold for immediate delivery added 3.2 percent at $1,235.55 an ounce by 12:07 p.m. in London, according to Bloomberg generic pricing. It’s heading for the ninth increase in 10 days. Trading volume on the Comex in New York was double the 100-day average for the time of day.
Gold Demand
Stock volatility and growth concerns will boost the appeal of bullion as a store of value and consumers in China and India may buy more, according to P.R. Somasundaram, the managing director for India at the World Gold Council. The group today said fourth-quarter global demand was the highest in more than two years.
Futures traders, who at the start of this year predicted a more than 50 percent chance of a U.S. rate increase in March, now peg the odds of a move by December at just 30 percent. Goldman Sachs Group Inc. said this week in a report before Yellen’s remarks that the bank still saw bullion dropping to $1,000 as the Fed hikes three times in 2016.
“It seems as though people are flooding to safe-haven assets,” Wayne Gordon, executive director for commodities and forex at UBS Wealth Management, said in a Bloomberg TV interview in Singapore on Thursday. “We still think we could have two rate hikes at the end of the year.”
* Holdings in gold-backed exchange-traded products rose 8.2 metric tons to 1,571.3 tons as of Wednesday, the highest since July, data compiled by Bloomberg show. They’re up 7.5 percent in 2016, the best start to a year since 2009.