A breakout of unpredictability has seen the metal re-establish its haven status with investors warming up to gold as markets are gyrated by apprehensions about slowing global growth. As US equities tumbled in December, the holdings of gold-backed exchange-traded funds grew by 2.25m ounces.
Helping to push the value of the metal to six-month highs of higher than $1,290 a troy ounce. That forced funds who had placed speculative wagers against gold in the US futures market to protect their positions, moving the market from a net short to a net long position (where bullish wagers outnumber bearish bets) for the first time since June last year.
Analysts also believe there has been a significant rise in bullish bets and short covering although this has still to be mirrored in official data. Reports gathered by the US Commodity Futures Trading Commission are not being published because of the limited government shutdown.
For most of 2018 gold was out of favour, struck by the strength of the dollar and interest rate rises in the US, which undermined the charm of assets such as the precious metal that provide no yield. That saw gold trade as low as $1,174 in August despite rising geopolitical concerns and the fallout from US-China trade dispute.
Then sentiment towards gold improved towards the end of the year as US stock markets fell and volatility increased. That pattern has only extended into 2019 amid speculation a slowing US economy will compel The Federal Reserve to cease raising interest rates.
With some analysts predicting that gold can endure shining as long as markets remain volatile. A fact underlined only late last week after a better than expected US jobs report saw equity markets bounce.