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Gold rekindles appeal for asset managers as ETF holdings rise

Bulls haven’t quite given up on gold yet.

Volume on the Comex was 52% above the 100-day average for this time of day, as traders and investors roll their positions into February futures from the December contract that’s expiring on Monday. Aggregate open interest is headed for a third straight quarterly gain, the longest stretch since 2009, while holdings in ETFs are near the highest in a year.

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A worker carries a 28 kilogram gold bar after casting and cleaning in the foundry at a gold mine in Westonaria, South Africa. Photographer: Waldo Swiegers/Bloomberg

Prices have advanced this month, keeping the metal on course for the biggest annual gain since 2010 after two monthly declines. Gold has benefited from a weakening dollar, tepid inflation that’s spawned divisions among Fed officials over a policy path forward, and uncertainties over President Donald Trump’s plan to cut taxes.

Emerging markets, value and small-cap funds dominate the list, but other factors need to be considered, as well.
November 8

In Europe, wrangling over Brexit and Germany’s struggles to form a coalition government have underpinned demand for the metal as a haven.

“Gold is starting to attract attention of asset allocators,” said George Gero, a New York-based managing director at RBC Wealth Management. The bullion futures market is “quiet and steady as we wait for more headlines on taxes in the U.S. and a Fed hike in December,” he added.

Bullion futures for February delivery slipped 0.4% to settle at $1,291.80 an ounce on the Comex in New York. The contract’s open interest has surpassed December’s since Tuesday. The metal has advanced 1.7% this month and is up about 12% in 2017.

Aggregate open interest, a tally of outstanding futures contracts, rebounded after declining the previous two sessions.

A majority of gold traders and analysts surveyed in a weekly Bloomberg poll published Thursday saw gains ahead, as the dollar slumps.

Bloomberg News