Demand for gold continues to surge amid geopolitical upheaval
The net demand for gold has reached its longest run for five years, with BullionVault investors adding the precious metal for the eight consecutive month.
The decision by the online internet peer-to-peer gold-and-silver-bullion exchange marked the longest stretch of gold buying since the summer of 2012.
Gold Buyers In Eurozone
Eurozone countries, including Germany, France and the Netherlands led the way in terms of growth. BullionVault’s head of research (Adrian Ash) suggested the reason behind the continued demand for gold extended to politics and market forces further afield.
“After Brexit and Donald Trump won their votes last year, political risk continues to drive private investor demand for gold,” Ash said.
“The number of new precious-metals investors starting to buy in the UK has eased back from last summer’s post-financial crisis highs. But the Eurozone’s busy election calendar is spurring precautionary demand across the currency union, especially in northern member states.”
Safe Have Status
Why do precious metals do well in times of uncertainty?
As with other precious metals, gold is often used by investors to ‘hedge’ against currency inflation, deflation or devaluation. With the currencies of several major countries under pressure and becoming less valuable in recent months, gold has become a ‘safer’ option to invest in.
As Cartsten Fritsch of the commodities team at Commerzbank says: “Gold has been profiting not only from the weak U.S. vehicle sales figures in March, which have weighed on sentiment among market participants, but also from falling stock markets and lower bond yields.”
Live Prices – Gold 5 Minute Chart
Gold Prices
The above, paired with seismic shifts in geopolitics in recent weeks – particularly the invoking of article 50 by Theresa May and the future of Gibraltar question – mean gold is now worth $1,255 per ounce.
On BullionVault, 23% of users have chosen to grow their gold holdings since February, while the number who have opted to sell has fallen by 22%.
BullionVault’s gold investor index therefore increased from 51.8 to 54.2 between February and March, further tipping the balance towards an overall net buying of gold.