Gold demand surges amid fears for world economy
DEMAND for gold jumped in the wake of the Bank of England’s decision to cut interest rates earlier this month, the Royal Mint has revealed.
By LANA CLEMENTS
Express.co.uk
Wed, Aug 17, 2016
Sales of gold bars and coins jumped by half, while transactions of the precious metal leapt by a quarter as rates were chopped to 0.25 per cent.
Gold prices have soared by around 25 per cent this year – or 45 per cent in sterling terms, thanks to the weakened pound – from $1,060 to $1,330, amid investor fear of stock market turmoil.
The bullion is seen as one of the safest places for cash in times of economic fear and turmoil, and comes amid numerous signs the global economy is slowing down.
And prices climbed to record highs of $1,900 during the financial crisis.
Laith Khalaf, senior analyst at Hargreaves Lansdown said: “There has been a veritable gold rush this year, as global economic woes and loose monetary policy have attracted investors to the yellow metal in their droves, and it’s no surprise that the Bank of England’s interest rate cut has exacerbated this trend.
“Gold has benefited from the falling yield on other safe haven assets, in particular cash and bonds.
“The ongoing clatter of the printing presses in central banks across the UK, Japan and Europe also helps give gold a leg up, as it is a hedge against currency devaluation.”
The metal’s price could lift higher in the coming months, according to QuotedData mining analyst Paul Burton.
He said: “One of the most compelling bullish factors supporting gold prices is low inflation and interest rates, and real interest rates are very low or, in some cases, negative.
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