Gold Funds Keep Drawing Cash Even as Market Momentum Fades
New York (Jun 15) In the run-up to the Brexit vote, investors are continuing to add money to precious metal funds, even as the rally shows signs of slowing.
Assets in exchange-traded funds backed by gold have increased every day this month and silver holders are near an all-time high on mounting concern U.K. voters will choose to leave the European Union, which may roil global financial markets and devalue the pound. Gold traded near a five-week high. Prices slid 0.2 percent to $1,283.07 an ounce as of 10:48 a.m. in London, the first decline in six days.
Priced in pounds, bullion is the most expensive in three years. It touched as high as 912.99 pounds ($1,294.35) on Tuesday.
“The U.K. referendum is seen as increasing both geopolitical stress and the risks to global growth,” Tom Kendall, head of precious metals strategy at ICBC Standard Bank Plc, said by phone on Wednesday. “One consequence of an exit would be to prolong this era of unusual monetary policy, further reduce sovereign yields, and so increase gold’s attractiveness.”
Gold funds are among the most popular investments, with assets rising 29 percent to 1,880.3 metric tons in 2016, the biggest increase in seven years. Five polls put the ‘Leave’ campaign ahead, and the Sun, Britain’s best-selling newspaper, backed a Brexit on its front page.
Another factor for gold, U.S. and Japanese central bankers are meeting on monetary policy this week. Futures traders have ruled out any chance of a rate hike when the Federal Reserve ends its meeting Wednesday. The odds of a December increase stand at less than 50