Text size:

  • Small
  • Normal
  • Large

Investors no longer need a shield of gold

Metal price drops 5 per cent as news trims its hedge value

Global markets have received much news that in most quarters was taken as positive, with most European banks passing their stress tests and US economic indicators looking up for a change. But one group looked at the developments with a frown: gold bugs. The price of gold, which hit a record of $1,266.50 an ounce on June 21, is down almost 5 per cent this month as investors see less of a need to buy the precious metal as a protection from risk.

Bullion dropped as low as $1,182.40 an ounce yesterday and holdings in the world's biggest gold-backed exchange-traded fund, or ETF, slid to its lowest since June 9. Investors around the world flocked to gold in the depths of the financial crisis as a hedge against the considerable volatility and, at times, negative outlook in the equity markets. The events of the last couple of weeks have created a sense of relative calm.

"Gold prices are likely to remain bumpy" in coming weeks, said Tobias Merath, the head of commodity research at Credit Suisse, told Bloomberg. While some bullion holders are selling the metal to lock in gains, "more longer-term-orientated investors are now slowly returning to the market," Mr Merath said. Assets in the SPDR Gold Trust, the biggest ETF backed by bullion, declined 0.3 tonnes to 1,301.74 tonnes yesterday, the company's website says.

Global bullion ETF holdings are up by 219,000 ounces so far this month, heading for the smallest gain since February, after climbing 4.77 million ounces in May, the UBS analyst Edel Tully said yesterday in a report. Assets grew by 273.8 tonnes in the second quarter, the second-largest quarterly inflow ever, the World Gold Council said in a report. "Over the course of last week, ETF investors liquidated 397,000 ounces, marking the most severe weekly sell-off since the beginning of January," Mr Tully said. "Current sentiment towards gold is decidedly unsure and cautious."

* with Bloomberg

Back to the top

More articles

Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 Three generations of the Hakimi family tend to their stall Crawford Market in Mumbai. Subhash Sharma for The National

In pictures: Shopper’s delight at Crawford Market in Mumbai

Crawford Market is an old British-style covered market dealing in just about every kind of fresh food and domestic animal imaginable. Later on renamed Mahatma Jotirao Phule, the market remains popular among locals and visitors by its old name, taken from Arthur Crawford who was the first municipal commissioner of the city.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National