By Eddie Van Der Walt
Investors bought record amounts of gold in the first half as concerns over Britain’s vote on European Union membership and U.S. presidential elections drove demand for a haven.
Slumping yields also reduced appetite for alternatives like stocks and bonds.
Purchases of 1,064 metric tons smashed a 2009 record by 16 percent, the World Gold Council said in a report Thursday. In the second quarter alone, investor demand more than doubled to 448.4 tons from a year earlier. Higher prices hurt jewelry demand and increased supply from hedging and scrap.
Gold prices jumped 25 percent in the first half of the year, the most in four decades, even as consumer demand slowed in India and China, the biggest buyers. Investors piled into bullion-backed exchange-traded funds as political risks including Brexit and a Donald Trump candidacy for the U.S. election became realities. Negative rates on sovereign bonds of many nations also erased their advantage over gold’s zero yield.
“The increase in investment demand helped make gold one of the best performing assets of the year, comfortably outperforming many equity indices, bonds, commodities and real estate,” Alistair Hewitt, head of market intelligence at the London-based council, said by phone. “Western political developments, significantly Brexit and the looming U.S. elections were key factors creating uncertainty.”