Gold investment gains momentum

12th July 2019
Resources Rising Stars

Holdings in global gold-backed ETFs rose sharply in June by 127 tonnes to 2548t – equivalent to US$5.5 billion in inflows – on heightened geopolitical uncertainty and more accommodating monetary policy signals by central banks, according to the World Gold Council (reports MiningNews).

This drove interest rates and the US dollar lower and shifted gold-price momentum, director of investment research Juan Carlos Artigas told MNN sister site Mining Journal.

Global assets under management (AUM) rose 15% to $115 billion, the largest monthly increase since 2012, as all regions experienced inflows.

More than half the AUM growth came from the 9% gold price rally in June, making gold one of the top performing asset classes so far this year.

It has reached all-time highs in several currencies, most notably the Australian dollar.

Artigas said the three main gold trends the council flagged in its 2019 gold outlook report were still at play and had in fact intensified.

"With increased financial market uncertainty borne out of a intensifying trade dispute between the US and China, the Brexit saga and around the continued stability of continental Europe, investors want to hedge against those increased risks," he said.

Political uncertainty and a weaker pound sterling have supported inflows to UK-based gold-backed ETFs, which remain at all-time highs. UK-based holdings have grown to 554t or 22% of global gold-backed ETF assets.

Artigas said the US Federal Reserve had made a 180-degree turn on monetary policy.

"Recall that last year the bank sketched a bullish scenario, raising the possibility of increasing interest rates by several basis points. Since then, their tone has moderated, and they have now signalled a return to easier monetary policy."



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