Gold bulls emboldened as US Fed grapples with Trump policy uncertainty
By Luzi Ann Javier
The Federal Reserve has emboldened gold bulls.
Prices and trading volumes surged Thursday on call options giving holders the right to buy bullion at higher prices. On Wednesday, investors poured $413 million into SPDR Gold Shares, the largest ETF backed by the metal, recouping almost half of the money that exited last month.
The Fed, which kept interest rates steady this week after a two-day meeting, gave little clue on when it might next tighten monetary as officials grapple with the uncertainty created by a new presidential administration.
Policy makers in December telegraphed three rate hikes for 2017. Gold prices have rebounded about 6 per cent this year, helped by a weaker dollar and demand for the metal as a haven, after posting the worst quarterly loss since 2013.
“There is no imminent concern of a Fed rate hike, and that gleams the green light on for the metals to move higher,” David Meger, a director of metals trading at High Ridge Futures in Chicago, said in a telephone interview. “The weakening dollar and the lack of concern of a Fed interest-rate hike, and slightly higher inflationary numbers in the market, all support the precious metals.”
Gold futures for April delivery advanced 0.9 per cent to settle at $1,219.40 an ounce at 1:41 pm on the Comex in New York, after touching $1,227.50, the highest for a most-active contract since Nov. 17.
Call options giving holders the right to buy March futures at $1,250 an ounce jumped 53 per cent Thursday. That was the most-active gold option, with volume more than doubling from a day earlier. The four most-traded options on Thursday were calls, with prices rising at least 27 per cent for each.
The Federal Reserve has emboldened gold bulls.
Prices and trading volumes surged Thursday on call options giving holders the right to buy bullion at higher prices. On Wednesday, investors poured $413 million into SPDR Gold Shares, the largest ETF backed by the metal, recouping almost half of the money that exited last month.
The Fed, which kept interest rates steady this week after a two-day meeting, gave little clue on when it might next tighten monetary as officials grapple with the uncertainty created by a new presidential administration.
Policy makers in December telegraphed three rate hikes for 2017. Gold prices have rebounded about 6 per cent this year, helped by a weaker dollar and demand for the metal as a haven, after posting the worst quarterly loss since 2013.
“There is no imminent concern of a Fed rate hike, and that gleams the green light on for the metals to move higher,” David Meger, a director of metals trading at High Ridge Futures in Chicago, said in a telephone interview. “The weakening dollar and the lack of concern of a Fed interest-rate hike, and slightly higher inflationary numbers in the market, all support the precious metals.”
Gold futures for April delivery advanced 0.9 per cent to settle at $1,219.40 an ounce at 1:41 pm on the Comex in New York, after touching $1,227.50, the highest for a most-active contract since Nov. 17.
Call options giving holders the right to buy March futures at $1,250 an ounce jumped 53 per cent Thursday. That was the most-active gold option, with volume more than doubling from a day earlier. The four most-traded options on Thursday were calls, with prices rising at least 27 per cent for each.
