By Allan Seccombe
GLOBAL political and economic uncertainty drove investors into gold, with investment hitting a record high and making up about half of all demand for the precious metal.
According to data released by the World Gold Council, a market development body, investment demand reached 1,064 tonnes in the first half of the year, 16% higher than the previous record set in the first half of 2009 as the global financial crisis took shape.
"A ‘perfect storm’ of conditions in the gold market this year has pushed investment to historic levels," the council said, highlighting the stellar performance of gold-backed exchange-traded funds (ETFs) that drove the value of investment demand in the six-month period to $41.6bn.
"It was ETFs that really stole the show," it said, adding that the buying of the products around the world had been "exceptional", with 579.2 tonnes of metal flowing into ETFs during the first half of the year compared with outflows of 616 tonnes in the previous 10 quarters.
"Although there is currently no indication that demand will come to a halt, there is evidence of profit-taking and it would be prudent to assume that recent momentum may be difficult to sustain. Nevertheless, the positive shift in attitudes among large-scale Western investors in particular, appears to have solid foundations."
Among the reasons driving investors into gold were negative interest rates in Japan and parts of Europe, Britain’s decision to leave the EU and the run-up to presidential elections later this year in the US.