Gold Futures’ Gain Is Biggest in 7 Weeks
The gold market is trying to prove that its latest rally isn’t a flash in the pan.
Gold futures prices scored their biggest gain in seven weeks Wednesday, boosted by strong buying of the metal in Japan.
Japanese savers, facing a cap on government insurance for bank deposits starting Monday, have been turning to gold as a safe-haven investment, analysts say.
Tanaka Kikinzoku Kogyo, Japan’s largest seller of gold bullion, said its sales rose ninefold in February from a year earlier.
Given the country’s troubled banking system and the threat of more bank failures, Japanese investors are “quite scared” by the new insurance limits, said Leonard Kaplan, head of Prospector Asset Management in Evanston, Ill.
In New York, the April gold futures contract jumped $5.40, or 1.8%, to $302.20 an ounce.
Gold briefly traded above $300 in early February, then pulled back modestly. The near-term futures price is up 8.3% year-to-date.
Gold has rallied periodically in recent years, but most of the rallies have quickly died out. Major central banks around the world have been heavy sellers of gold reserves in the last decade, preferring to hold interest-paying bonds instead.
Many gold analysts remain skeptical that the metal can rebound to its levels of the mid-1990s anytime soon, barring a major shock to the world financial system or a sustained uptrend in inflation.
But that hasn’t stopped investors from bidding shares of gold-mining companies sharply higher this year. A gold-stock index tracked by the Chicago Board Options Exchange surged 6.3% Wednesday to its highest level since October 1999. The index is up 36% since Jan. 1.
Among major gold stocks, Barrick Gold (ticker symbol: ABX) rose 76 cents to $18.86 on Wednesday, Placer Dome (PDG) surged 73 cents to $12.50, Newmont Mining (NEM) jumped $1.79 to $28.24 and Harmony Gold (HGMCY) was up 76 cents to $11.69.
Silver prices rallied with gold Wednesday. Near-term silver futures in New York jumped 9.5 cents to $4.67 an ounce. But silver is up just 2.2% this year.
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Clawing Its Way Back
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