Gold glitters as investors head toward safe-haven assets
Gold futures raced past US$1,500 an ounce and is setting its sights on US$1,600 as global trade tensions continue to roil markets and push investors to safe-haven assets, according to analysts.
The metal advanced as much as 2.6 per cent an ounce on the Comex to the highest since 2013, driven by a number of factors including political uncertainty, lower interest rates and buying by major investors. The December gold contract was at US$1,519.60 an ounce, up US$35.40 from Tuesday.
Gold stocks drove the Toronto Stock Exchange higher by 115.73 points, or 0.72 per cent, to 16,265.22 on Wednesday, beating back the bears that had driven the TSX down on Tuesday to its lowest level in seven months. Barrick Gold Corp., one of the world’s largest gold companies by market cap, added 3.1 per cent, Kinross Gold rose 4.7 per cent and B2Gold Corp. jumped 11.5 per cent, on a mix of higher metal prices and strong corporate earnings.
“Escalating trade tensions and rising risk aversion will continue to fuel global investor demand for gold as a safe haven asset and portfolio diversifier of risk,” notes United Overseas Bank analysts Heng Koon How, Peter Chia and Victor Yong, as geopolitical concerns grip investors.
For Goldman Sachs Group Inc. analysts, gold’s rally above US$1,500 is just the beginning. Analysts at the bank predict prices that have already soared to a sixyear high will climb to US$1,600 an ounce over the next six months as investors seek haven amid a dimming global economic outlook, fuelled by heightening trade tensions between the U.S. and China.
“If growth worries persist, possibly due to a trade war escalation, gold could go even higher, driven by a larger ETF gold allocation from portfolio managers who still continue to under-own gold,” Goldman analysts including Sabine Schels said in a note Wednesday.