According to the IBJA’s Bullion Physical Market Report for the day gone, March 11, gold extended its rally to a fresh record high after a key US jobs report bolstered expectations that the Federal Reserve will soon cut interest rates. The precious metal climbed as much as 1.6% to $2,195.15 an ounce, rising for an eighth straight day in an advance that has been fueled by hopes for rate cuts, central bank buying and renewed investor interest.
Yet the scale and speed of the recent ascent has caught many seasoned market observers off-guard, with no clear catalyst for the rally beyond long-standing pillars of support. Data Friday-8 March, showed US employment surpassed expectations in February while wage gains moderated, adding to signs of healthy economic growth and softer inflation.
The Federal Reserve’s long-anticipated pivot to looser monetary policy is widely expected to boost gold’s appeal compared with yield-bearing assets like bonds. Persistent geopolitical tensions in the Middle East and Ukraine have bolstered the precious metal’s role as a haven asset, while central banks, particularly the People’s Bank of China, continue to add to their holdings.
Friday’s US jobs report showed nonfarm payrolls advanced 275,000 last month following a combined 167,000 downward revision to the prior two months. The unemployment rate rose to 3.9%.
Money managers have increased their bullish gold bets by 63,018 net-long positions to 131,060, weekly CFTC data on futures and options show. The net-long position was the most bullish in more than two months. Long-only positions rose 49,597 lots to 164,640 in the week ending March 5.
The long-only total was the highest in more than two months. Short-only positions fell 13,421 lots to 33,580. The short-only total was the lowest in more than seven months. Money managers have flipped to bullish from bearish on silver as long positions outnumbered short ones by 15,530, weekly CFTC data on futures and options show.
The traders had been net-short by 4,143 positions a week earlier. The net-long position was the most bullish in more than two months. Long-only positions rose 7,950 lots to 41,049 in the week ending March 5. The long-only total was the highest in three months. Short-only positions fell 11,723 lots to 25,519. The short-only total was the lowest in seven weeks.
Hedge funds and money managers were already amassing bullish positions in gold just before its record-breaking run began at the beginning of the month. The net-long position in U.S. gold futures and options surged 93% in the week ended March 5 to the highest in two months, according to Commodity Futures Trading Commission data released Friday.
Bullion breached December’s record on March 5 and clocked consecutive daily highs since. That suggests gold’s longest winning streak since July 2020 is partly driven by fund buying. It’s worth noting that while funds’ net longs jumped, they were coming out of a months-long doldrums. Bullion has risen for an eighth straight day in an advance that has been fueled by hopes for interest-rate cuts, central bank buying and renewed investor interest.
Exchange-traded funds cut 135,378 troy ounces of gold from their holdings in the last trading session, bringing this year’s net sales to 3.45 million ounces, according to data compiled by Bloomberg. The sales were equivalent to $292.4 million at yesterday’s spot price. Total gold held by ETFs fell 4 percent this year to 82.1 million ounces, the lowest level since Dec. 17, 2019.
Gold advanced 4.7 percent this year to $2,159.98 an ounce and by 0.5 percent in the latest session. State Street’s SPDR Gold Shares, the biggest precious-metals ETF, pared its holdings by 27,780 ounces in the last session.
The fund’s total of 26.3 million ounces has a market value of $56.7 billion. ETFs also cut 2.41 million troy ounces of silver from their holdings in the last trading session, bringing this year’s net sales to 16.6 million ounces. This was the sixth straight day of declines, the longest losing streak since Feb. 6.
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