Gold’s 2016 rally gathered momentum on Thursday with the metal exchanging hands for $1,269.30 an ounce in late afternoon trade, up $27.50 or 2.2% from yesterday’s close to a one-year high.
Gains in Comex futures for delivery in April, the most active contract, came in heavy volumes of more than 21 million ounces, nearly 50% above the usual daily average.
Today’s trading also pushed the gold market into official bull territory – defined as a 20% move from a low. Gold touched a near six-year low of $1,049.60 December 17. The intra-day high on Thursday constitutes a 20.9% or $219.70 jump from those levels.
Nowhere is the change in sentiment more evident than in the physical gold-backed exchange traded funds industry.
Physical gold ETFs have enjoyed net inflows of more than 270 tonnes up to March 2 this year.
At some 1,735 tonnes vaults have not been this stacked since January 2014 and nearly two years of outflows have poured back in.
At the current pace, Q1 2016 could easily top the torrid June quarter in 2010 when nearly 300 tonnes were added to ETF vaults.
Following three down years, many factors have been driving gold’s resurgence in 2016.
Geopolitical turmoil, doubts about the health of the global financial system as central banks push monetary policy into uncharted territory, slumping stock markets and first indications that inflation may be returning have all sparked safe haven buying of gold.
To the wall of worries have been added a new element – Donald Trump.
The Wall Street Journal is giving voice to the notion worries about Trump’s ascendancy in the US presidential race is pushing investors into the relative safe harbour of the gold market.
The paper quotes a couple of brokers and fund managers who believe “ Mr. Trump’s candidacy makes the precious metal a smart place to hide out for the next few months”.