Gold Blasts Through £1150 Per Ounce

Gold price hits a 6 Year High!

Gold passes the £1150 per ounce breaking a 6-year resistance price mark. Gold reached an intraday high of £1156.78 per ounce on July 18th 2019 breaking past gains made earlier that week. We are tantalisingly close to the record gold price of £1178 per ounce set in 2011. 

Gold Price Over The Last 10 Years

Are we seeing the beginning of a bull run similar to that seen in the early 2000's. Ross Norman of Sharps Pixley believes we are in his recent article. 

The current economic conditions are almost a perfect storm and added to this we have populist politicians taking ever greater risks with global stability. Signs are already pointing to an economic slowdown prompting fresh moves by central banks and policy makers to stimulate the economy. The ECB have restarted their bond buying package and the FED we expect to cut interest rates as soon as this week which will only benefit the price of gold further.  

We have all the ingredients of a bull run in place we just need the spark. This spark could come in the form of excess corporate or leveraged loan defaults especially in the US, a slowdown in the Chinese economy or a direct impact from ongoing trade conflicts or war mongering.

Investors are switching from equities into bonds as a sign of their anticipation of a slowdown with some going even further jumping into gold as zero interest/dividend which gold is known for is still better than a negative yielding bond where investors are guaranteed to lose money!  On top of this gold ETF’s are seeing a significant uptake with the World Gold Council reporting that gold assets under management reached US$115bn the largest monthly increase since 2012. In June 2019 alone inflows topped US$5.5bn.

World Gold Council ETF Inflows April 2018 - June 2019

This is a sure sign institutional investors are making the switch and coupled with central bank buying at unprecedented rates I am asking the question what do they know that the retail investor doesn’t?