Gold Continues Record Run as Speculators Pile In

The price of gold has continued its record-breaking run, with speculators showing increased interest at levels not seen since 2019. Gold futures experienced a marginal dip of 0.1% on Monday, following a week of setting new record highs. Over the previous five trading sessions, gold futures recorded a notable gain of 4.3%.

Exchange-traded funds (ETFs) tracking the price of gold, such as the SPDR Gold Shares ETF (GLD) and the iShares Gold Trust ETF (IAU), mirrored this performance, with gains of 4.5% and 4.6%, respectively, over the week.

Analysts attribute gold's recent strong performance to a favourable investment environment, describing it as a Goldilocks scenario with conditions considered "just right." Warren Patterson, the head of commodities strategy at ING, pointed to a higher-than-expected jobless rate, which increased expectations of looser monetary policy by the Federal Reserve. This, in turn, is seen as supportive of gold, especially as the dollar weakens.

Patterson also highlighted geopolitical uncertainty, ongoing conflicts, and the upcoming US election as factors contributing to safe-haven demand for gold. The consensus among analysts suggests that gold prices are expected to trade higher throughout the year.

Bill Baruch, president of commodities brokerage firm Blue Line Futures, sees gold's recent movement as the beginning of a "multi-year bull market in metals" and emphasises that gold has been in a bull trend since 2019.

The latest data from the Commodity Futures Trading Commission revealed a significant increase in net long positions in COMEX gold, marking the largest weekly addition since June 2019. The third consecutive week of increases brought the total net long positions to 131,060 lots.

Despite the strong performance of gold, gold miners had previously underperformed the commodity. However, gold miners' shares, as measured by the VanEck Gold Miners ETF (GDX), have gained 15% since February 28, potentially indicating a recovery. Top holdings in the ETF, such as Newmont Goldcorp and Barrick Gold Corp., also saw positive gains last week.