Investors’ appetite for gold drove the inflows into gold ETFs at a record high. Spot gold prices moved above $1,800 per ounce yesterday as investors find solace in safe-haven assets amid the turmoil in markets.
Gold prices have reached new peaks this year and it is among the best performing asset class in 2020 even as the pandemic has rattled financial markets globally. The SPDR Gold Trust ETF has risen 19% this year. Gold mining companies’ stock prices have also risen and Newmont Mining, the world’s largest gold mining company is up 47% this year.
Most analysts are positive on gold’s continued upward trend as it tends to outperform in periods of economic uncertainty as the one we have been experiencing since the onset of the coronvirus. Rising fiscal deficits, low interest rates, geopolitical turmoil—almost all the macro indicators are positive for gold prices.
Last month, Bank of America forecast an all-time high for gold prices while Goldman Sachs raised its 12-month price target to $2,000 per ounce.
Investors have also added gold to their portfolio and inflows into gold ETFs in the first half of 2020 totaled $39.5bn, surpassing the previous record of $23bn in the full year 2016.
“Gold ETF investment demand shattered numerous records this year as investors sought safety from the economic turmoil created by COVID-19,” said Juan Carlos Artigas, head of research World Gold Council.
He added, “We expect gold ETF investment demand to continue its strong momentum in the second half as concerns over COVID-19’s economic impact and infection rates linger, gold price performance remains solid and accommodative monetary policy heightens risk-off sentiment.”
While several leading fund managers advise allocating money into gold for diversification. For the time being, gold seems to be poised to continue its bullish run as gold price surged all the way towards the $1825 level rather early in the Wednesday session, showing a clear break out of the massive barrier underneath.