Saturday, June 10

Investors return to the haven of gold

Investors return to gold, which is interpreted as a bullish sign for the precious metal. The SPDR Gold Shares, an exchange-traded fund that invests in companies that mirror the performance of gold bullion as well as physical gold, posted the highest volume of net inflows since 2004 on Friday.

Specifically, the fund had entries worth 1,630 million dollars.

Changes in ETF holdings are being monitored as an indicator of investors’ interest in long-term bets on gold, after holdings shrank in 2021, a dismal year for gold prices as they wiped out a 5 percent decline.

This percentage contrasted with the magnificent evolution it had in 2020, with the outbreak of the pandemic and the search for safe-haven value, when double-digit revaluations were noted.

Investors are looking for safe-haven value

This quantitative jump comes ahead of this week’s pivotal Fed meeting, which economists expect will mark the start of rate hikes in March.

But in addition, the interest in gold as a refuge value has also aroused as a result of the fall in shares, especially growth ones, the tensions between the United States and Russia over Ukraine and the fall of bitcoin, which is trading at $37,000.

“The recent increase in market volatility, heightened geopolitical tensions and falling cryptocurrency prices have likely increased the appeal of gold as a safe haven,” said Robin Tsui, Asia Pacific Gold Strategist at Global SPDR Business. .

In terms of tonnage, Friday’s net inflow was 27.6 tonnes. Meanwhile, Comex-trading hedge funds cut their bullish bets to a five-week low in the week to last Tuesday.

Will this trend continue?

Prices have risen about 2 percent so far this year, rising to $1,840 an ounce last week. “While the US dollar has weakened a bit, most of gold’s gains appear to be driven by a better market mood, as well as some buying by safe haven seekers,” Julius analyst Carsten Menke explains. Baer.

The expert believes that the investor could ask if this is now the beginning of a lasting upward movement in the prices of gold and silver.

But from the Swiss bank they do not think so, “since the movement of risk aversion in the stock market does not seem to be driven by a deterioration in the economic outlook, but rather by fears of a policy error on the part of the United States Federal Reserve”.

That is, an unjustified excessive tightening of monetary policy and the taking of profits by investors in the stock market since they are at maximum levels.

In this regard, this week’s meeting of the Fed’s interest rate setting committee on Wednesday will be closely watched.

“Assuming the current wave of risk aversion eventually fades as the Fed addresses these fears, and barring the economic outlook deteriorating, we believe the gold and silver markets are once again experiencing a temporary but not lasting rally, albeit in the short term,” says Menke.

Bank of America, on the other hand, bets on gold

However, Bank of America bets on gold since they have raised the price of an ounce of gold for 2022 to 1,925 dollars by 5.2 percent, while for the prediction with a view to 2023, the increase would be 10.4 percent to 2,049 dollars.

The investment bank alleges that “historically, gold has been a useful portfolio diversifier and hedge against risk and uncertainty. We consider the potential risks of stagflation and uncertainty from new coronavirus variants.”