The quantity of bodily gold held by trade traded funds surged over the third quarter as buyers appeared for safe places to stash money amid considerations over slowing world development and looser financial coverage.
Demand for the yellow steel amongst retail and institutional buyers greater than doubled in contrast with the identical quarter final yr to succeed in 408.6 tonnes, of which nearly two-thirds — 258 tonnes — was attributable to purchasing by ETFs, in line with knowledge from the World Gold Council, an industry-backed physique. The stability of about 150 tonnes got here from buyers shopping for gold bars and cash instantly.
Gold has been one of many best-performing commodities of 2019, rising by virtually 18 per cent to a six-year excessive above $1,500 an oz.
The yr’s advance has led some analysts to foretell that gold may hit a report $2,000 an oz inside the subsequent two years, topping the nominal highs of 2011. The rally has boosted the share costs of main producers, together with Barrick Gold and Newmont Goldcorp.
Gold has historically been seen as a haven and a retailer of worth, in addition to being much less uncovered to political threat than many different commodities. Its attraction has been burnished additional this yr by an enormous inventory of bonds buying and selling at negative yields, which assure consumers a loss in the event that they maintain to maturity.
“Buyers have elevated their publicity to gold in response to low rates of interest, unfavourable yields, and geopolitical and financial uncertainty,” mentioned Alistair Hewitt, a director on the WGC.
Final week, the US Federal Reserve introduced its third curiosity rate cut of 2019, which it justified on the grounds of an unsure world financial outlook. Its extra cautious stance because the flip of the yr has been mirrored by the European Central Financial institution and the Financial institution of Japan, amongst others.
“The largest change this yr has been the affect of the Fed. Final yr everybody anticipated the Fed to lift charges [this year],” Mr Hewitt mentioned. “The US [Federal Reserve] is vital however gold is globally traded and extra central banks have lower charges this yr than any since 2009.”
Gold-backed ETF holdings rose to a report 2,855 tonnes, price $136bn, in September. Demand from US-listed ETFs was significantly sturdy in the course of the third quarter, mentioned the WGC.
SPDR Gold Trust, the world’s largest physically-backed gold ETF, noticed inflows of $6.5bn of gold over the 9 months to September. At BlackRock’s iShares Gold Belief, inflows over the identical interval got here to $2.9bn.
Gold has additionally been supported by purchases by central banks, particularly in Turkey, Russia and China. Mixed, the trio added virtually 120 tonnes of gold to their reserves in the course of the quarter, which places purchases by public establishments on monitor for one more report yr. As a gaggle, central banks have snapped up virtually 550 tonnes this yr.
Nevertheless, shopper demand for gold jewelry took successful, down 16 per cent to 460 tonnes, damped by falls in confidence in India and China.
However many analysts see the gathering financial gloom weighing in gold’s favour. Joni Teves, a treasured metals strategist at UBS, mentioned in a word that “the present setting stays supportive of gold — we proceed to see greater costs forward”.