RE: The Times today5 Apr 2021 03:33
For the benefit of those that don’t subscribe to the Times Digital.
Sorry my previous post referred to Gold having fallen 10% over a month, it was a quarter as the article says.
While the prices of many commodities have surged this year, one has been conspicuously out of favour: gold. The yellow metal has just recorded its worst quarter in more than four years, with its price falling by a tenth. By late March, gold-backed exchange-traded funds had reported outflows of 184 tonnes, according to the World Gold Council, the most since the fourth quarter of 2016.
Context is everything, however. For gold, “2020 was a phenomenal year”, James Steel, precious metals analyst at HSBC, said. After rising by 18 per cent during 2019, gold prices surged another 25 per cent last year as the pandemic drove a flight to the perceived safe- haven investment.
At its peak in August, the price of gold hit $2,072 an ounce, the highest ever in nominal terms and the strongest in real terms in four decades. Although it dipped back below $1,700 twice last month, “normally anything above $1,500 is a very good number”, Steel said.
While market turmoil and Covid-19 uncertainty had driven investors’demand for gold last year, this year’s sell-off reflected “the relative strengthening of the global economy as vaccination programmes continue in earnest and further stimulus packages are introduced”, Krishan Gopaul, a senior analyst at the World Gold Council, said. People were investing in “assets that typically benefit more when there’s economic growth”.
However, he added that “the flip side of the stimulus is that we’re seeing ballooning budget deficits. We’re already seeing concerns around inflationary pressures and the risks that there might be market corrections, given that the equity valuations are already very high.” These factors could feed through to support gold prices, he said.
Sign In
Follow the stocks
