Investors Propel Purchases of Gold ETF on Geopolitics `Trigger'

(Bloomberg) -- Investors stepped up buying of the world’s largest gold-backed exchanged traded fund by the most in seven months amid concern about the outcome of European elections and a more aggressive U.S. stance on North Korea, Syria and Iran.

Holdings in SPDR Gold Shares climbed 1.4 percent Wednesday to 860.76 metric tons, the biggest one-day increase since September and the highest since Dec. 7. With gold futures up 11 percent this year, buyers are pouring funds into the non-interest bearing metal as the dollar fluctuates and Treasury yields hover close to the lowest levels this year.

After suffering a set-back in March, gold rallied this week to a five-month high amid caution over the outcome of elections in France and the U.K. and signals the Trump administration may walk away from the nuclear deal with Iran. Bank of America Merrill Lynch sees gold rising to $1,300 an ounce as the market remains jittery.

Geopolitics was “the trigger in getting the market moving higher,” Jeffrey Nichols, senior economic adviser to Rosland Capital, said in a telephone interview. “The market is subject to outside influence -- maybe one of these geopolitical things heat up and push gold into a higher range.”

Gold futures for June delivery rose less than 0.1 percent to settle at $1,283.80 an ounce at 1:42 p.m. on the Comex in New York. The metal settled Tuesday at $1,294.10, the highest closing price since Nov. 4.

Gold is “not too expensive” compared with bonds and stocks, Francisco Blanch, head of commodities research at Bank of America Merrill Lynch, said Thursday on Bloomberg TV.

Equities have hit a series of record highs this year. The S&P 500 index rose 0.3 percent Thursday in New York. Treasury 10-year yields touched 2.16 percent on April 18, the lowest level since November. The yield was at 2.24 percent Thursday.

In other metals:

• Silver fell for a third day on the Comex.
• Platinum rose on the New York Mercantile Exchange while Palladium climbed by the most since January.

--With assistance from Mark Shenk

To contact the reporter on this story: Susanne Barton in New York at swalker33@bloomberg.net.

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Joe Richter