Sun, Apr 23, 2017 - Page 14 News List

Investors flock to gold ETF on geopolitics ‘trigger’

‘MOVING HIGHER’:Bank of America Merrill Lynch said gold might climb as high as US$1,300 an ounce and an adviser said the market was subject to outside influence


A worker lifts a cooling gold bar from a mold in a foundry at the JSC Krastsvetmet non-ferrous metals plant in Krasnoyarsk, Russia, on March 3.

Photo: Bloomberg

Investors stepped up buying of the world’s largest gold-backed exchange-traded fund (ETF) by the most in seven months amid concern about the outcome of European elections and a more aggressive US stance on North Korea, Syria and Iran.

Holdings in SPDR Gold Shares on Wednesday climbed 1.4 percent to 860.76 tonnes, the biggest one-day increase since September last year and the highest since Dec. 7.

With gold futures up 11 percent this year, buyers are pouring funds into the non-interest bearing metal as the US dollar fluctuates and US Treasury yields hover close to the lowest levels this year.

After suffering a setback last month, gold rallied this week to a five-month high amid caution over the outcome of elections in France and the UK and signals the administration of US President Donald Trump might walk away from the nuclear deal with Iran.

Bank of America Merrill Lynch (BofA Merrill Lynch) sees gold rising to US$1,300 an ounce as the market remains jittery.

Geopolitics was “the trigger in getting the market moving higher,” Rosland Capital senior economic adviser Jeffrey Nichols said in a telephone interview. “The market is subject to outside influence — maybe one of these geopolitical things heat up and push gold into a higher range.”

Gold futures for June delivery on Friday rose less than 0.1 percent to settle at US$1,283.80 an ounce on the Comex in New York. The contract is down 0.4 percent from last week’s US$1,288.50 per ounce.

The metal on Tuesday settled at US$1,294.10, the highest closing price since Nov. 4 last year.

Gold is “not too expensive” compared with bonds and stocks, BofA Merrill Lynch head of commodities research Francisco Blanch said.

Other metals:

Silver fell for a third day on the Comex.

Platinum rose on the New York Mercantile Exchange while palladium climbed by the most since January.

Iron ore futures climbed 5.1 percent.

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