The latest report from The World Gold Council notes that gold ETFs saw their biggest monthly inflows since May of last year, with $2.7 billion in January.
The inflows happened amid broad stock market volatility, which might have inspired investors to seek safe haven assets such as gold. The price of gold has hovered around $1800/oz, largely due to a hawkish stance from the Fed. With inflation proving non-transitory, gold could break out at any moment, and the steady inflows are a good sign for yellow metal bulls. April gold futures were up to $1,820.40 as inflation worries continued to proliferate.
Gold stayed above $1,800 on the heels of a strong jobs report, spurring further optimism despite potential imminent rate hikes from the Fed.
“To hold $1800 despite bond yields rising is a pretty solid picture for gold,” said Bruce Ikemizu, chief director of the Japan Bullion Market Association, to BullionVault.
In a note, UBS said “Central to gold’s resilience is a combination of elevated demand for portfolio hedges and a belief either that the Federal Reserve stays behind the curve on tackling inflation or overtightens, causing growth to falter.”
While other inflation hedges, such as bitcoin, have faltered amid market volatility, gold has proven resilient.
All Eyes on Thursday’s Inflation Report
Thursday’s U.S. January inflation report is expected to be above 7%, which would be its highest since the early 1980s.
“I’m concerned that if we continue to see major moves in widely owned stocks, investors will get turned off by markets,” said Dennis Dick, a proprietary trader and market structure consultant. “One thing is certain, volatility is here to stay.”
Gold’s history as a safe haven asset could propel it during increasingly volatile times. Investors can get exposure to physical gold through the Sprott Physical Gold Trust (PHYS). Investors seeking to take advantage of the value in gold equities exposure can look at the Sprott Gold Miners ETF (SGDM) and the Sprott Junior Gold Miners ETF (SGDJ).
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