The metal is up more than 20 percent since a December low, the common definition of a bull market, outpacing all major assets...
Bullish sentiment in gold is reflected in exchange-traded funds. Investors raised holdings in gold-backed ETFs by 259 metric tons so far this quarter, which would be the biggest quarterly gain since June 2010. Holdings are rising after three straight years of withdrawals....
Open interest, a tally of outstanding contracts in Comex futures, rose to the highest since 2012. That suggests investors increased bullish positions and prices may rise, said Tai Wong, director of commodity products trading at BMO Capital Markets Corp. in New York...“There’s definitely a fear factor out there,” said John Meyer, an analyst at SP Angel Corporate Finance LLP in London. “Investors are getting back into gold.”
As I have detailed, gold does not generally go up during a recession (SEE: The Myth That Gold Is a Great Performer During A Recession), so Bloomberg has it wrong that gold is climbing as some sort of haven in a weakening economy.
There us another factor driving gold. We are very likely in the early stages of a major acceleration in price inflation. First 3%, then 5%. This will continue to force the Fed to hike interest rates, though they will be slow to do so. The idea that the Fed won't raise rates and that we are headed back down in rates is absurd. But the hesitant battle against price inflation by the Fed will be a main driver of an advancing gold price.