Gold funds grow in demand after steep drop

The price of gold has jumped 14 percent this year, towering over the nearly flat performance of the Standard & Poor’s 500 index.
By STAN CHOE, Associated Press Published: March 16, 2014
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Gold is back on the rise after dropping like lead last year. Although it has recovered just a portion of its steep loss from 2013, the shift in momentum has been enough to halt the stampede of investors from gold-related funds.

The price of gold has jumped 14 percent this year, towering over the nearly flat performance of the Standard & Poor’s 500 index. The stocks of gold-mining companies have been even better. The FTSE Gold Mines index of miners around the world has jumped 25 percent.

To be sure, many analysts don’t expect gold’s mini-rebound to last. Barclays Capital, for example, projects gold will average $1,260 an ounce in the last three months of this year. That would be an 8 percent drop from the current price of roughly $1,370 per ounce. Many of the conditions that led to last year’s decline are still in place: Inflation remains low, the Federal Reserve is slowing its bond-buying stimulus program and the economy is making some progress, even if it’s less than hoped.

Investors are nevertheless giving gold-related funds another chance, albeit tentatively. The SPDR Gold Shares exchange-traded fund (GLD), one of the most popular ways to buy gold, now holds 26.1 million ounces for investors. That’s up from 25.7 million ounces at the end of 2013.