In Commodity News 29/06/2016
Gold advanced as investors bet central banks would have to continue supporting the global economy in the wake of Britain’s vote to quit the European Union.
In the three days since the vote, holdings in exchange-traded funds have jumped 1.9 percent, the biggest increase since the beginning of March. Bullion for immediate delivery rose as much as 0.9 percent and traded at $1,317.26 an ounce by 11:09 a.m. in London, according to Bloomberg generic pricing.
Gold is trading near its highest level in more than two years and is heading for its best first-half in more than four decades while investors abandon risk assets and turn to havens. Federal Reserve Governor Jerome Powell said Tuesday that global risks have shifted further to the downside after the referendum, introducing new uncertainties that may merit reassessing monetary policy.
“The bull is in control,” said Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank A/S. “Gold has been in all the news as the place to be and investors have responded, particularly with the market now pricing out a U.S. rate hike until 2018.”
Traders are now pricing in a greater probability that the Federal Reserve will cut rates in upcoming meetings rather than raise them. They don’t assign more than a 50 percent chance of an increase until the beginning of 2018, Fed funds futures show. A gauge of the dollar held its decline.
Gold’s investment case has been strengthened by the Brexit vote as the fallout may spur the world’s central banks to step up easing, hurting currencies and favoring bullion, Marc Faber, publisher of the Gloom, Boom & Doom Report, said Wednesday. Bank of Japan chief Haruhiko Kuroda said that more funds can be injected into the market if needed.
Holdings in gold-backed exchange-traded funds rose 5.6 metric tons to 1,940.3 tons as of Tuesday, the highest level since September 2013, data compiled by Bloomberg show. Investors have added 35.7 tons to ETFs in the past three days. Hansen said any drop below $1,305 an ounce would be met by further ETF buying.
Source: Bloomberg
