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

Help your portfolio take off with helium
Commodities

Help your portfolio take off with helium

Dominic Frisby looks at the coldest substance on earth, helium, and explains why now’s the time to buy.
30 Nov 2022
These 2 stocks are set to soar
Commodities

These 2 stocks are set to soar

The returns from these two aluminium and tin stocks could be spectacular when the commodity cycle turns says David J Stevenson.
16 Nov 2022
How to invest in gold
Gold

How to invest in gold

Gold can be a good way to diversify your investments and help during difficult markets.We look at how to get started with the precious metal.
11 Nov 2022
Hold on to your oil and gas stocks
Energy stocks

Hold on to your oil and gas stocks

Oil and gas stocks have done very well in the last few months. But they’ve got a long way to run yet, says Dominic Frisby.
10 Nov 2022

Most Popular

Fan heater vs oil heater – which is cheaper?
Personal finance

Fan heater vs oil heater – which is cheaper?

Sales of portable heaters have soared, as households look to cut their energy costs. But which is better: a fan heater or an oil heater? We put them t…
21 Nov 2022
Stock market crash? This time it’s (slightly) different
Stockmarkets

Stock market crash? This time it’s (slightly) different

The bears expecting a stock market crash have got it wrong, says Max King.
30 Nov 2022
Is it cheaper to leave the heating on low all day?
Personal finance

Is it cheaper to leave the heating on low all day?

The weather is getting colder and energy bills are rising, but is it really cheaper to leave the heating on low all day or should you only turn it on …
1 Dec 2022