Despite Goldman Sachs "short gold" recommendation - which came within pennies of being stopped out last week - traders, investors, and safe-haven seekers continue to push into the precious metals. Gold has "seen some exceptional flows after quite a few years of being the ugly redheaded stepchild, but it’s not moved into sort of beauty-queen territory," notes one commodity strategist as hedge fund net-long positionsare the highest since Feb 2015 and gold holdings in ETPs has soared to 18 month highs (amid the longest stretch of gains since 2012) squeezing the likes of Blackrock (in search of physical gold to meet ETF demand).
Chart: Bloomberg
As Bloomberg reports, There seems to be almost nothing that will deter this year’s newfound gold enthusiasm.
Even with a turnaround in global equities and signs of a more robust U.S. economy, investors are still piling into the metal. Money managers are holding the biggest net-wager on a rally in more than a year, and holdings in bullion-backed funds have climbed for 10 straight weeks, the longest streak since 2012. All this comes as Goldman Sachs, the bank that foresaw gold’s collapse in 2013, continues to stick by its prediction that prices will start to retreat.
The rally “has some legs, because I don’t think there’s any easy solution to this conundrum of slow growth,” said John Stephenson, the chief executive officer of Stephenson & Co. Capital Management in Toronto, which oversees C$55 million ($42 million). “What’s driving it is really just this uncertainty surrounding central-bank policy, negative interest rates, because they’re really at the heart of the whole issue right now that markets are struggling with. In that kind of environment, gold looks pretty attractive.”
Gold has “seen some exceptional flows after quite a few years of being the ugly redheaded stepchild, but it’s not moved into sort of beauty-queen territory,” said Fiona Boal, director of commodity research at Fulcrum Asset Management in London, which oversees $3.7 billion.
Gold is heading for a third straight monthly gain. While the U.S. has been resilient, there’s increasing concern that slowdowns in Europe and Asia could lead to a global recession.