Good news for precious metals

New York

BAD news on the global economy has been good for precious metals. Money managers increased their net-long position in gold, silver, platinum and palladium for a third straight week, helping to fuel rallies for the metals amid signs of a flagging US labour market, a drop in German factory orders and a forecast by the International Monetary Fund for slower global expansion.

The price gains last week pared losses for 2015 on mounting expectations that sluggish growth will force the Federal Reserve to hold off on raising interest rates, which can curb the appeal of assets like commodities that don't pay interest. More than US$8 billion was wiped from the value of exchange-traded funds backed by precious metals this year through September, and prices as recently as this month were at six-year lows, partly because the Fed was indicating higher borrowing costs were imminent. Now, more investors expect the central bank to push the increase back into next year.