By Barani Krishnan
Investing.com - The macro fund has got the memo: sell oil and buy gold.
Bullion and futures of gold rose for a sixth-straight day on Wednesday, reaching nearly $1,350 an ounce, boosted by bets the Federal Reserve will have to cut rates to shield the U.S. from a possible global recession and keep its economy chugging along after record growth of nearly a decade.
Crashing oil prices, with deeper losses envisaged from weak fuel demand despite the peak summer driving season, was also driving macro funds out of oil and into gold, analysts said. Holdings of SPDR Gold Shares (NYSE:GLD), the world’s largest gold-backed exchange-traded fund, rose 0.3% to 743.21 tonnes on Friday, signaling growing fund interest.
Spot gold, reflective of trades in bullion, traded at $1,329.65 per ounce by 3:30 PM ET (19:30 GMT), up $4.25, or 0.3%, on the day. It earlier scaled a three-month high at $1,344.08.
Gold futures for August delivery, traded on the Comex division of the New York Mercantile Exchange, settled up 4.90, or 0.4%, at $1,333.60 per ounce. The session peak was $1,348.75, a high since the week ended Feb. 17.
Gold has gained more than $55, or 4%, since May 29. The last time it had such a winning streak was in January, when it also rose six sessions in a row to trade above $1,330.
Many market participants expect the double trade wars waged by the United States with China and Mexico to continue propeling gold as a safe haven, pushing it past the $1,400 resistance next.
But some analysts said the precious metal could reach exhaustion in its upward trek unless it broke new ground higher soon.
“At this point, $1,365 is a very important technical barrier that we need to cross and if we don’t do that, we get some serious profit-taking,” said Walter Pehowich, a New Jersey-based independent precious metals analyst.
Federal Reserve Chairman Jerome Powell said in a speech that the central bank will do what it takes to retain the near-record expansion of the U.S. economy, amid President Donald Trump’s trade wars.
Elsewhere in metals, automotive component palladium managed to stay just ahead of gold despite falling on concerns that the global auto sector will slow from the ongoing trade wars.
Spot palladium fell $18.10, or 1.3%, to $1,330.80 an ounce. The silvery-white metal, used for purifying gasoline emissions, traded above $1,600 at one point in early March. But it has lost about 20% since on concerns that it may have rallied too much, too soon on talk of tight supply.