Gold prices notched their largest quarterly gain in three decades, showing that worries about the markets and economy continue despite a six-week-long rally in stocks, bonds and commodities.
Gold prices rose 16.5% in the first three months of the year, the biggest leap since 1986. Holdings at SPDR Gold Shares, the world's largest gold-focused exchange-traded fund, are approaching their highest level since December 2013, while traders are placing more bets on rising prices.
The rally is a rare bit of good news for a metal that has been in retreat for much of the past five years, a period when U.S. economic activity picked up and the dollar surged. Even so, many investors remain skeptical that gold will go much higher unless the global outlook dims considerably.
"This is one of the most surprising gold rallies I have ever seen," said Ira Epstein, a strategist at the Linn Group who has been trading gold for 40 years.
Net bets on higher gold prices by hedge funds and other speculative investors stood at 161,610 contracts in the week ending March 22, their highest level since February 2015, data from the Commodity Futures Trading Commission showed.
Jeffrey Gundlach, who runs Double Line Capital LP, said in January that gold could rise as high as $ 1,400 a troy ounce this year. He repeated the call again in March, but said he had become more nervous about the metal, given the magnitude of its recent rally.
Hedge-fund manager John Paulson pared his long-held bet on gold by $400 million in the fourth quarter of 2015, according to a 13F filing. A spokesman for Mr. Paulson didn't comment.
Gold-mining stocks also have racked up big gains, although many have drifted off their earlier highs. Newmont Mining Corp(NEM) is up 48% so far this year, Randgold Resources has gained 54% and Barrick Gold Corp.(ABX), the world's largest gold miner by output, is up 72%.
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