Gold Futures May Just Roll Over Into Record High After Surge
Gold Futures May Just Roll Over Into Record High After Surge
(Bloomberg) -- As gold hurtles toward a record price in the spot market, some futures contracts are trading even higher, setting up a somewhat odd situation.
With traders shifting positions from August to December futures, that may result in the incoming most-active contract already at a record high. There were only about 10,000 fewer contracts outstanding in December than August as of Wednesday.
December, which is likely to become the contract with the most open interest in coming days, touched $1,927.10 an ounce Thursday, above the all-time high for the most-active contract of $1,923.70 reached in September 2011. It settled more than $27 above August.
Gold has been propelled higher by a weaker dollar, negative real interest rates and economic turmoil amid the coronavirus pandemic, with spot prices surging by almost 25% this year.
“The reason why December is so high: there’s a lot of August-to-December going through today, and I think part of the reason for that is gold had such a big run-up,” Tai Wong, head of metals derivatives trading at BMO Capital Markets, said by phone Thursday. “If gold continues to rally – if people continue to buy – you will see that continue to move out.”
Even as December prepares to lead in open interest, August has by far the highest volume, almost six times that of the next-highest contract on Thursday.
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