Home / Insurance Tips / Gold is back in vogue with investors, but the question is, does this rally have legs?

Gold is back in vogue with investors, but the question is, does this rally have legs?

Gold bars featuring illustrations of monkeys in Hong Kong. Gold is back in vogue as investors seek out a safe haven amid growing global volatility.

Gold has returned fashionable as investors seek out a secure haven amid growing global volatility.

The real question is whether this gold rally will have legs, or whether it will fizzle out like numerous others over the past few years.

The precious metal is in the midst of the tremendous upward move, jumping 18 percent since the oncoming of 2016. The important thing gold futures contract rose by a whopping US$53.20 an ounce on Thursday alone, bringing it to US$1,247.80. Gold’s performance this year may be the polar complete opposite of most other commodities, that are down sharply.

Gold’s surge may come as global equities tumbled into a bear market. On Thursday, stock indexes worldwide fell on fears within the health of the global economy and banking sector, with MSCI’s world stock index dropping to more than 20 percent below its peak, while safe-haven 10-year Treasury yields hit their lowest since 2012.

Several factors will work in gold’s favour: In addition to wobbling markets, central bank gold buying is rising and also the U.S. dollar is weakening as investors are increasingly doubtful the Fed will raise rates of interest as much or as soon as previously assumed. Those doubts gained steam after chairman Janet Yellen’s remarks to Congress now, by which she took a cautious tone around the economy.

Over recent times, the consensus view from Goldman Sachs along with other Wall Street banks was that U.S. interest rate hikes were imminent and were poised to crush the gold price. That drove many generalist investors out of the market, and they’re only starting to take an interest again.

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