Gold rekindles appeal for asset managers as trading, ETFs rise

[NEW YORK] Bulls haven't quite given up on gold yet.

As of 2:20pm in New York, volume on the Comex was 52 per cent above the 100-day average for this time of day, as traders and investors roll their positions into February futures from the December contract that's expiring on Monday. Aggregate open interest is headed for a third straight quarterly gain, the longest stretch since 2009, while holdings in exchange-traded funds are near the highest in a year.

Prices have advanced this month, keeping the metal on course for the biggest annual gain since 2010 after two monthly declines. Gold has benefited from a weakening US dollar, tepid inflation that's spawned divisions among US Federal Reserve officials over a policy path forward, and uncertainties over President Donald Trump's plan to cut taxes. In Europe, wrangling over Brexit and Germany's struggles to form a coalition government have underpinned demand for the metal as a haven.

"Gold is starting to attract attention of asset allocators," George Gero, a New York-based managing director at RBC Wealth Management, said in an email. The bullion futures market is "quiet and steady as we wait for more headlines on taxes in the US and a Fed hike in December," he said.

Bullion futures for February delivery slipped 0.4 per cent to settle at US$1,291.80 an ounce on the Comex in New York. The contract's open interest has surpassed December's since Tuesday. The metal has advanced 1.7 per cent this month and is up about 12 per cent in 2017.

Aggregate open interest, a tally of outstanding futures contracts, rebounded on Wednesday after declining the previous two sessions.

A majority of gold traders and analysts surveyed in a weekly Bloomberg poll published Thursday saw gains ahead, as the dollar slumps.

BLOOMBERG