The rally in gold is picking up fresh fuel from investors.
Two key data points on Friday suggest speculators are adding plenty of cash to the rally, which could drive prices even higher. Gold has now surpassed $1,400 an ounce, reaching an almost six-year high.
- ETF Holdings: Funds backed by gold increased their assets by 32 tons on Friday, the biggest increase since 2016, according to data tracked by Bloomberg.
- CFTC Positioning: Hedge funds and other large speculators boosted their net long positions in U.S. gold futures and options to the highest since February 2018. That’s based on the latest weekly data from the Commodity Futures Trading Commission.
“Gold bulls are back in control,” Edward Moya, senior market analyst at Oanda Corp., said in a note, adding the metal remains supported by rising expectations of a 50 basis point cut at the Fed’s July meeting. “The question is no longer will the Fed ease, but by how much? The Fed historically likes to kick on an easing cycle with a bang and a 50 basis point cut should become the base case.”
The rally has been driven by signs that the Federal Reserve and other central banks are turning more dovish on monetary policy. Planned U.S. sanctions against Iran, as well as the coming meeting between the American and Chinese presidents, is also creating a raft of bullish factors for the precious metal.
Gold could end the year even higher, according to Russ Koesterich, a portfolio manager at the $27 billion BlackRock Global Allocation Fund.
Spot gold climbed 0.6% to $1,407.76 at 12:04 p.m. in London. Prices soared 4.3% last week, the biggest gain since April 2016. A gauge of the greenback was near a three-month low.
Recent U.S. dollar weakness and more speculative money moving into bullion are among the factors that suggest gold has more upside than downside, Martin Lakos, division director at Macquarie Wealth Management, said in a Bloomberg TV interview. The bank forecasts $1,450 by the first or second quarter of next year, he said.
In other precious metals, silver, platinum and palladium all gained.