Gold futures settled above $1,300 an ounce for the first time since August after the European Central Bank expanded stimulus measures, boosting demand for the metal as a store of value.
ECB President Mario Draghi said the bank will buy 60 billion euros a month of assets through September 2016. The Executive Board earlier proposed buying 50 billion euros ($58 billion) of bonds a month through December 2016, according to two euro-area central-bank officials.|
Bullion is up almost 10 percent this year as stagnating economies challenge policy makers to generate new ways to buoy growth. The euro fell to an 11-year low against the dollar as the European Central Bank expanded its bond-buying program to include government bonds, boosting demand for gold as an alternative to currencies that are being revalued.
“The size of the package was a positive surprise for the gold market, and we are seeing an increase in safe-haven buying after the plunge in the euro,” David Meger, the director of metal trading at HighRidge Futures LLC in Chicago, said in a telephone interview. “Gold will continue to get bid in this low-interest environment.”
Gold futures for February delivery rose 0.5 percent to settle at $1,300.70 an ounce at 1:42 p.m. on the Comex in New York. Aggregate trading was 51 percent more than the 100-day average, according to data compiled by Bloomberg.
Bullion priced in euros jumped to the highest since April 2013, extending the year’s advance to 17 percent.
After shunning gold for two years, investors are returning to the metal amid concern that U.S. growth won’t be enough to offset weakness in foreign economies.
“There is a ton of uncertainty, and the ECB’s decision underscores that,” John Stephenson, chief executive officer at Stephenson & Co. Capital Management in Toronto, said in a telephone interview.
On the New York Mercantile Exchange, palladium futures for March delivery rose 0.5 percent to $772.30 an ounce. Platinum futures for April delivery rose 0.7 percent to $1,284.80 an ounce.
To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net
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