Gold climbs back towards one month high as uncertainties over the economy continue. This has bought Gold Bulls back into the ring after a quiet 2 months, perhaps due to traders shying away from riskier equities in favour of safe haven assets like gold.
Interestingly despite firmer US data coming to light, fears over the stability of the global economy remain as world equities shrink to an 8 month dip.
Since the beginning of the month global shares have lost over $3.2 trillion as the IMF slashed its growth forecast for 2015, this comes after Germany also lowered their 2015 growth forecast.
Eric Zoldan, Investment Management Analyst commented that when “money is flowing out of all asset classes, it does not seem to be flowing out of the gold market”.
This highlights the need for holding gold to provide insurance for your portfolio, balancing out your riskier assets. Over recent weeks we have reported over a mixture of Eurozone woes from Germany to Greece as investors lose confidence.
This in turn may lead to the rise in looser monetary policies thus heightening the potential for currency debasement, we see all these factors being supportive of gold in the short term.
Although data in the US appears to be stronger, it will be interesting to see whether the fed will hold off raising interest’s rates for the time being.
Last time we saw an increase in monetary stimulation from global central banks gold rocketed by 70% as fears grew over the problems caused by rising inflation.
Although we are unlikely to see an exact repeat of 2008, it is re assuring to know gold has retained its safe haven status.