Something Interesting is Happening Here, Peak Gold
Investors are returning to gold after shunning the metal for three straight years. A stagnating global economy is threatening U.S. expansion and casting doubts over whether Federal Reserve policy makers will raise interest rates anytime soon. That’s sending the dollar lower and raising the allure of gold as both a store of value and a haven asset. A Bloomberg Intelligence index tracking bullion producers has jumped 20 percent this year.
“Traders feel like there’s more weakness ahead for this economy, and gold is the place to be positioned,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in a telephone interview. The gains for bullish options show that “we may be seeing a change in this market,” he said.
Traders are placing the odds of a U.S. rate increase this year at just 30 percent, down from 85 percent a month ago. Bullion holdings in ETPs have climbed for 15 consecutive days, the longest run since September 2012, according to data compiled by Bloomberg.