Global holdings in gold exchange-traded funds soared to the highest level since 2013 as investors got behind a rally in the metal.
As Bloomberg reports, most of the inflows were into SPDR Gold Shares, a U.S.-based ETF favored by money managers with a short-term view for its relatively high liquidity and narrow bid-offer spread. Gold has jumped 2.4 percent this year, touching the highest price in four months, as the dollar fell, Chinese consumers stocked up for the Lunar New Year and signs of global inflation picked up.
“I’m always a bit nervous when gold prices rise this much, this fast,” said Mark O’Byrne, marketing director of bullion dealer GoldCore Ltd. “But there certainly is healthy demand from China and the futures market — I think we should break highs above $1,400 later in the year.”
Options traders are betting on at least another month of rising prices. They’re charging more for benchmark call contracts than for similar puts, and by the biggest premium since November. The bias, measured in implied volatility, has increased to about 0.6 percentage points.
Furthermore, gold tends to do well in January and February. That’s when demand spikes in the biggest consuming nation, China.
The precious metal, which reached a four-month high this week, crossed into 2018 with an eight-day rally, the longest string of increases since 2011.
Finally we note that it appears since The Fed hiked rates on Dec 13th, there has been a preference for physical gold over digital gold…