Gold futures reached a three-week high as weaker-than-expected U.S. factory orders and slower growth in service industries boosted demand for the metal as a haven.
Growth in U.S. service industries slowed for a fourth straight month in February, prompting the first job cuts in two years, according to a report by the Institute for Supply Management Thursday. The group’s employment measure dipped below the expansion threshold for the first time since February 2014. Applications for jobless claims unexpectedly climbed last week, a Labor Department report showed Thursday.
Gold rallied 19 percent this year, beating gauges in Treasuries, currencies and equities amid concerns the slowdown in global growth will hurt the U.S. economy. That’s also fueling bets the Federal Reserve may delay interest rate increases this year, helping boost the investment appeal for bullion, which doesn’t pay yields or dividends.
“The big rally this year is drawing more interest from across the spectrum of investors, including some who haven’t been involved in the space for some time,” said Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York.
Gold futures for April delivery jumped 1.3 percent to settle at $1,258.20 an ounce at 1:43 p.m. on the Comex in New York. Prices reached $1,261.30, the highest since Feb. 11.
Through Jan. 5, hedge funds and other large speculators had been net-short on gold for eight straight weeks. The trend reversed on Jan. 12, and as of last week, their net-wagers on price gains reached the highest in a year, according to U.S. government data.
The bullish sentiment is also being reflected in exchange-traded funds. Investors boosted holdings in gold-backed ETFs by 251.9 metric tons this quarter, poised for the biggest such gain since the three months ended June 2010. Holdings have been increasing after three straight years of withdrawals.
Silver, palladium and platinum also climbed A Bloomberg Intelligence gauge of gold producers rose 2.9 percent, led by Yamana Gold Inc. and Kinross Gold Corp., which gained 6.9 percent and 6.7 percent, respectively.