(Kitco News) – The first half of the year saw record investment demand for gold and the World Gold Council (WGC) said they expect that insatiable appetite to remain a dominant theme in the second half of the year.
Although investment demand is likely to remain strong, the WGC noted that jewelry demand is expected to remain weak.
“An economic contraction will likely result in lower demand for gold in the form of jewelry, technology or long-term savings. This is particularly evident in key gold markets such as China or India,” the analysts said.
Tuesday, in its mid-year outlook the WGC said that the COVID-19 pandemic has reshaped the long-term investment landscape. The analysts added that in an environment with massive uncertainty and low interest rates, gold will continue to shine as a safe-haven asset.
The analysts said that expectations for the global economy to quickly recover from the devastating effects of the coronavirus are starting fade. The virus, particularly in the U.S., continues to spread, forcing some state and local governments to reintroduce lockdown measures.
“Against this backdrop, we believe that gold can be a valuable asset: it can help investors diversify risks and may positively contribute to improving risk-adjusted returns,” the WGC said.
Investors are paying more attention to gold as a safe-haven hedge as renewed worries of weak economic growth weighs on equity markets, the WGC said. Global equity markets have seen unprecedented gains since the COVID-19-induced selloff in March. However, the WGC noted that equity valuations don’t reflect the true state of the economy.
“While many investors are looking to take advantage of the positive price trend, there is growing concern that such frothy valuations may result in a significant pullback, especially if the economy experiences a setback from a second wave of infections,” the analysts said. “Gold’s effectiveness as a hedge may help mitigate risks associated with equity volatility.”
While the need for diversification rises every day, the WGC said that the list of perceived safe-haven assets continues to dwindle. Since March, governments and central banks around the world have cut interest rates and pumped massive amounts of liquidity into financial markets in an attempt to stabilize the global economy.
The WGC noted that the current low-interest rate environment is forcing investors, particularly pension funds to take more risk for higher yielding assets.
“Lower rates increase pressure on the ability to match their liabilities and limit the effectiveness of bonds in reducing risk. In this context, investors may consider gold as a viable substitute for part of their bond exposure,” the analysts said.
Along with trying to anticipate the shape of the global recovery, the WGC said that there is growing speculation on the price pressures consumers will see. The analysts noted that gold will do well in extreme inflationary and deflationary environments.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
