Gold investing continued to prove an attractive hedge against inflation in the first half of this year, according to gold investor index BullionVault.
While shares, bonds, base metals and crypto slumped in the first half, private investing reached its highest level in almost a year in June. Although bullion prices have since retreated and private investing has edged back from its highs, the precious metal continues to hold firm for 2022, the online marketplace said.
Global stock markets lost 21.2% over the first six months of the year on the MSCI World Index, while Bitcoin dropped 26.2% amid soaring inflation, rising interest rates, a strong US dollar and the Russia-Ukraine war.
In contrast, gold finished June at its highest-ever mid-year prices, ending June flat from New Year’s Eve in terms of the US currency at $1817 per Troy ounce and adding 10.9% in British Pounds at £1493.
Adrian Ash, director of research at BullionVault, said: “If ever gold’s appeal as a safe haven needs confirming, its resilience during this year’s wider market turmoil is striking. Physical bullion was the best-performing asset during the initial deflationary wave of the Covid Crisis, when crude oil prices sank below zero. It has now outperformed all major asset classes except crude oil as inflation jumps to 40-year highs.
“Looking ahead, the rise in central-bank interest rates, although too little too late for cash savers, does present a headwind to gold prices, because the metal pays no income. Against that, the risk of recession becoming longer-term stagflation is likely to see portfolio managers and other existing investors continue to hold tight to gold as a form of insurance, and the metal’s success in 2022 so far is likely to attract fresh inflows if the slump in world stock markets continues in the second half of the year.”
BullionVault said the number of gold buyers fell by 17% in June compared to May, while the number of sellers rose by 8.6%.
