Investors are betting there are more gains to come in gold, even despite weak growth in March.
While gold futures have retreated from 13-month high, hedge funds are the most bullish on gold since January 2015. In the first quarter of 2015, gold was rising in value at its fastest in 30 years because of financial markets turbulence.
Last week Fed Chair Janet Yellen said that the central bank should move “cautiously” in raising interest rates in the midst of a weak global economy.
Precious metals consultants at London-based Metals Focus said that investment inflows into gold will increase as long as policymakers keep rates low to spur growth. Ineffective monetary policy is positive for gold prices, the analysts added.
Hedge funds increased net-long holdings in gold futures and options by 2.1% to 164,946 contracts last week. Money managers have boosted bullish wagers in three of the past four weeks.
Gold futures traded at $1,220 an ounce after hitting the high of $1,287.80 on March 11. Prices jumped 17% in the first quarter, the biggest rise since 1986.
