By Barbara Kollmeyer
Gold is poised to benefit from a “perfect storm” of fewer viable investment alternatives and bigger risks, according to an industry group that is the sponsor of one of the world’s biggest gold exchange-traded-funds.
Analysts have interpreted weak Japanese government bond demand—such as that seen for a 10-year auction earlier this week—as a sign that investors are losing faith in “unconventional monetary policies,” said the World Gold Council in its August monthly report.
“In this environment, we believe investors are using gold to hedge portfolio risk as they add more stocks and low quality bonds to their asset mix,” said the World Gold Council.
The World Gold Council, which created the SPDR Gold Trust Fund GLD, +0.24% GLD, +0.24% points out that gold has been one of the year’s best-performing assets.
On a continuous contract basis, gold futures GCZ6, +0.17% for December delivery reflected a 28% gain for the year so far. The S&P 500 index SPX, +0.00% is up around 6%, while oil prices CLU6, +2.50% are down 4.4% on the basis of the most recent contract: