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Gold Rises as Portfolio Buyers Continue to Flood In

By Geoffrey Smith -- Gold prices advanced again on Friday, carried along by a flood of money into gold-backed exchange-traded products amid concerns of asset bubbles in both stocks and bonds.

According to data compiled by Bloomberg, ETFs bought a net 27,501 ounces of gold on Thursday, the 17th-straight day of net additions to assets under management in the sector.

That means that ETF investors have bought a net 83.4 million ounces so far this year, explaining the momentum in prices despite a sharp drop in purchases by end users such as central banks and jewelers.

By 11:20 AM ET (1620 GMT), gold futures for delivery on the Comex exchange had risen 0.4% to $1,583.75 a troy ounce, having hit an intraday high of $1,585.95 hours earlier. Spot gold was up 0.3% at $1,580.93.

Silver futures were up 0.6% at $17.72, while platinum futures were down 0.8% at $967.00, dragged lower by a selloff in sister metal palladium. Copper futures were down 0.6% at $2.60 a pound.

Gold was supported by weakish-looking U.S. industrial production data, which showed factory output and capacity utilization dropping slightly – albeit not by enough to change the Federal Reserve’s interest rate outlook.

If anything, the chances of further monetary easing took a knock as U.S. retail sales came in as expected in January with a 0.3% gain, while the University of Michigan’s Consumer Sentiment index rose more than expected to its highest since May last year.

That all added to growing hopes that the Covid-19 outbreak may soon peak, limiting the damage to the world economy and removing the need for even more monetary stimulus.

The New York Fed had said late on Thursday it would trim the amount it was lending in overnight and two-week repo operations, steering against perceptions that it may be fueling a bubble in risk assets that have blithely shrugged off the coronavirus outbreak. Analysts at consultants PriceWaterhouseCoopers estimate an absolute dollar impact of some $570 billion, dwarfing all recent similar epidemics.

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