Gold funds grow in demand after steep drop

March 16, 2014

London (Mar 16)  The price of gold has jumped 14 percent this year, towering over the nearly flat performance of the Standard & Poor’s 500 index.

Gold is back on the rise after dropping like lead last year. Although it has recovered just a portion of its steep loss from 2013, the shift in momentum has been enough to halt the stampede of investors from gold-related funds.

 

The price of gold has jumped 14 percent this year, towering over the nearly flat performance of the Standard & Poor’s 500 index. The stocks of gold-mining companies have been even better. The FTSE Gold Mines index of miners around the world has jumped 25 percent.

To be sure, many analysts don’t expect gold’s mini-rebound to last. Barclays Capital, for example, projects gold will average $1,260 an ounce in the last three months of this year. That would be an 8 percent drop from the current price of roughly $1,370 per ounce. Many of the conditions that led to last year’s decline are still in place: Inflation remains low, the Federal Reserve is slowing its bond-buying stimulus program and the economy is making some progress, even if it’s less than hoped.

Investors are nevertheless giving gold-related funds another chance, albeit tentatively. The SPDR Gold Shares exchange-traded fund (GLD), one of the most popular ways to buy gold, now holds 26.1 million ounces for investors. That’s up from 25.7 million ounces at the end of 2013.

Silver Phoenix Twitter                 Silver Phoenix on Facebook