Major investors are putting their money into gold amid continued concerns about both the global economy and the uncertain political outlook.
Famed US investors George Soros and Stanley Druckenmiller are among those currently putting money into the precious metal thanks to its reputation as a safe haven in turbulent times. It’s understood that Mr Soros has been investing both in physical gold and gold mining shares; Mr Druckenmiller has spoken publicly about the safety of gold in comparison to stocks because of his concerns about the Chinese economy and the US Federal Reserve’s monetary policies.
2016 is a major year on the political front and that is increasing the uncertainty on the markets. As well as the UK referendum on membership of the EU and the US presidential election later in the year, there are a number of other issues that are making the precious metal attractive to investors.
Dennis Gartman, who publishes the Gartman Letter, told CNBC: “You have a Spanish election coming at you in a week and a half and that is terribly confusing. It looks like the left is going to win. You have rising nationalism in France. You have the strike in France. You have one thing after another.”
The possibility that the UK may leave the EU is making investors consider whether other nations could follow suit and the potential effects that would have on the value of the euro.
Meanwhile, Jim Steel, chief commodities analyst at HSBC, said that the steadily rising price of gold this year is due to investors, rather than major physical-gold-buying nations such as China and India increasing their holdings.
He said: "Basically, the rally has been entirely investment led.
"It's kind of like having a table with a leg missing. It's heavily investment led. I'd feel better with a longer-term rally if we had a physical component. It does present upside roadblocks further up.”
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