Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield.
SEE MORE: Record Investment Demand for Gold ETFs
Specifically, investment in gold jumped to 448 metric tons in the second quarter, or more than double the figure of the same period year-over-year, largely due to a year-over-year increase in ETF investment to 236.8 metric tons, compared to a 23 metric ton outflow the year prior.
“In my opinion this is a positive for gold bulls as the weak and impatient hands are exiting the trade. The current sentiment level has lots of room to move higher and could easily support another $100 / oz move in the price of gold without sentiment readings moving into overly optimistic levels,” adds Seeking Alpha.
For more information on the gold bullion market, visit our gold category.
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