Gold – this is the starting position

The price of gold has suffered in recent weeks from the record run on the stock markets. However, the loose monetary policy should support the precious metal, and the central bank and ETF investors have also recently bought gold. Is that enough to reverse the trend? Gold mining stocks like Barrick Gold remain very exciting for gold fans. Our favourite is the Bull VF6MJ5. The equity market has sparked investors’ appetite for risk with its recent price rises, in some cases to record highs. They are turning to riskier investments, but there is still a lot to be said for the gold price. More than 60 percent of the world’s central banks are currently pursuing an expansive monetary policy, which is leading to falling interest rates.

This is the largest share of central banks since the financial crisis about ten years ago. Since gold does not yield any returns, the interest rate disadvantage then drops. In the case of negative interest rates, investors do not even suffer any negative returns, as is the case with bond investments, for example. Central banks also bought gold. In the past quarter there was a decline compared to the same quarter of the previous year, but demand was still comparatively high at 156 tonnes. Overall, annual purchases thus rose to just under 550 tonnes – an increase of 12 per cent this year. ETF demand for gold was even stronger in the past quarter at around 260 tonnes. However, the recent recovery on the equity and bond markets has led to a slight increase in gold ETF outflows since October.