The “sum of all fears” has restored investors’ faith in gold.

Money is piling into gold amid concerns over the U.S. economy that could slow the Federal Reserve’s plans to raise interest rates. Adding fuel to the rally are growing U.S.-North Korea tensions. Last week, investors poured US$1 billion into the largest exchange-traded fund backed by bullion, the most since mid-2016. That helped gold close above US$1,300 an ounce for the first time this year.

ETF buyers are building their holdings, joining hedge funds that have boosted their net-long position in bullion futures by almost nine-fold since early July. Through Tuesday, assets in gold-backed ETFs tracked by Bloomberg posted the biggest three-day gain since February.

“If gold is really ‘the sum of all fears,’ then the gold price is saying that not all is rosy in the garden,” Ross Norman, the chief executive officer of London-based precious metals dealer Sharps Pixley Ltd., said in a note Wednesday. “Gold seems to have momentum behind it, too.”

Gold for immediate delivery slipped 0.4 per cent to US$1,334.09 an ounce at 2:03 p.m. in New York, after rising for four straight sessions, according to Bloomberg generic pricing. On Tuesday, prices climbed as much as 0.8 per cent to US$1,344.44, the highest since Sept. 8, 2016. Gold futures for December delivery fell 0.4 per cent to settle at US$1,339 an ounce on the Comex.

The price of SPDR Gold Shares, the biggest bullion-backed ETF, is up more than 7 per cent this quarter.

The odds of another rate increase in the U.S. by the end of this year have slipped to about 29 per cent from 40 per cent a month earlier amid doubts on central bankers’ resolve to tighten monetary policy.

On Wednesday, the central bank’s Beige Book report, based on anecdotal information collected by the 12 regional Fed banks from early July through August, showed the majority of districts reported “limited wage pressures and modest to moderate wage growth.”

‘Real Harm’

The Beige Book came a day after Federal Reserve Governor Lael Brainard said the U.S. central bank needs to pay careful attention to underlying inflation before raising rates again, as longer-run price pressure trends appear to be lower.

Also on Tuesday, Minneapolis Fed President Neel Kashkari said interest-rate increases over the past 18 months may be “doing real harm” to the U.S. economy, which would help explain why inflation is low and job growth has slowed. While U.S. unemployment of 4.4 per cent last month was only slightly above the 16-year low set the month before, inflation has remained beneath the Fed’s 2 per cent target for most of the last five years.

Congressional investigations of Russian meddling in the U.S. election and worries that Hurricane Irma could destroy properties in Florida are also clouding the U.S. outlook. Those concerns have helped weaken the dollar and boost haven demand for bullion.

The Bloomberg Dollar Spot Index fell for a fifth straight session, on course for the lowest close since January 2015, helping boost gold’s appeal as an alternative investment.

Concerns about U.S. political turmoil are mounting at a time of growing friction between the U.S. and North Korea. South Korean President Moon Jae-in warned Wednesday of an “uncontrollable situation” that could emerge unless North Korea’s provocations are stopped now.

Spot gold has rallied about 16 per cent this year, and its 60-day historical volatility hovered near the lowest since 2005.

“Some of the larger investors are just starting to come back to this asset class,” Arnaud du Plessis, a fund manager at CPR Asset Management SA, said in a telephone interview from Paris. “Many of them were scared off by volatility last year, and are only returning now, with volatility low and prices constructive.”