Gold’s quiet comeback

Gold has been among the best performing assets this year and could continue rising.

Gold has made an unheralded, but impressive comeback this year following a 30% drop in 2013. It has risen by over 9%, beating commodities, bonds and UK equities. It hit a four-month high of around $1,340 last month as the eurozone crisis briefly flared up again. Further gains look likely over the next few years.

Gold struggled last year as the US Federal Reserve began to taper' the amount of money it was printing. The prospect of even mildly tighter US monetary policy was seen as bad news for an asset that thrives on fear, bad news, and the threat of inflation. But tapering is now "priced in", reckons Citigroup.

With interest rates still at historic lows, fears of eventual inflation have hardly gone away. And the longer rates stay low, the greater the risk of bubbles forming and bursting, adds Bank of America Merrill Lynch (BAML), a worry that may bring new buyers into the market.

The appetite for gold from central banks and increasingly wealthy consumers in emerging markets remains healthy. Demand for gold jewellery has just recorded its best first quarter since 2005, according to the World Gold Council.

Throw in a wide range of geopolitical jitters, and it's no wonder BAML sees gold averaging $1,375 next year, up from $1,308 in 2014.

Recommended

Don’t count resources out
Commodities

Don’t count resources out

Commodities have performed poorly over the past year, but they tend to move in long and volatile cycles.
24 May 2023
Investing in silver: the bull market has only just begun
Commodities

Investing in silver: the bull market has only just begun

Silver is benefiting from increasing industrial demand, but it is also a store of value when things go wrong, and falling supply bode well too. David …
23 May 2023
How to invest in gold
Gold

How to invest in gold

Investing in gold can help you diversify and offers protection when markets struggle. But how do you get started if you want to invest in gold?
5 May 2023
The gold price hits a high – there’s still time to buy
Gold

The gold price hits a high – there’s still time to buy

Gold closed at its highest ever level on Friday, but the price could keep rising as demand grows, argues Dominic Frisby.
12 Apr 2023

Most Popular

Best savings accounts – June 2023
Savings

Best savings accounts – June 2023

Interest rates have been creeping up - we look at the best savings accounts on the market right now.
6 Jun 2023
Nationwide to give £100 cash boost to customers
Personal finance

Nationwide to give £100 cash boost to customers

Nationwide Building Society is giving customers £100 as it reinvests profits. Dubbed the Nationwide Fairer Share scheme, we look at who is eligible.
22 May 2023
How much will it cost you to retire early?
Pensions

How much will it cost you to retire early?

The pre-state pension income gap means couples may need an extra £136,000 if they want to retire at 60 – can you afford to retire early?
6 Jun 2023