“There are three structural factors prompting institutional investors to … increase their exposure to gold,” WGC’s head of market intelligence, Alistair Hewitt, told the Reuters Global Gold Forum. “The first is the unparalleled loosening of monetary policy, most notably the pernicious spread of negative interest rates. Second, you have increasingly fractious politics, aptly illustrated by Brexit, and … finally the slowing pace of U.S. interest rate hikes and consequent slowdown of U.S. dollar strength.”
[related_stories]Gold typically benefits from low interest rates, which diminish the opportunity cost of holding non-yielding bullion. Moreover, the hard asset acts as a safe-haven investment or a better store of wealth during times of global unrest and market volatility.
The surge in investment demand has helped fuel a 25% rally in gold prices over the first half. GLD is up 25.8% year-to-date, with Comex gold futures now trading around $1,343.4 per ounce.
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Looking ahead, the WGC anticipates jewelry demand to increase in the second half of the year, notably in areas like India where key festivals and fourth-quarter holiday season in the West, could provide further support.
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