The wild ride of stock markets in 2015 and the rocky start to 2016 has meant that investors have moved more of their wealth into gold, a traditional “flight to safety” journey for investment funds.
From 31 December 2015 to 11 January 2016, the SPDR ETF (symbol:GLD) increased by 10 metric tons to 680.51 tons.
The UK Guardian reports the following:
“After touching an all-time nominal high of more than $1,900 an ounce in 2011, gold values have generally declined. Since 2013, the yellow metal posted annual losses. Investor interest soured amid the commodity rout and a stronger US dollar, but so far in 2016, gold has resumed its traditional role as a safe haven in times of financial turmoil.
Its role as a de facto insurance policy allowed gold to buck the commodity sell-off as the new year dawns – industrial commodities like crude oil and copper were pressured hard by the worries over China, which is the biggest commodity consumer.”
Source: The Guardian
Where will gold go in 2016?
HSBC chief precious metals analyst, James Steel, is quoted as being “moderately bullish” on gold, with a 2016 average price forecast of $1,205. As reported in the Guardian:
“James Steel says “It’s one way to hedge yourself against a weaker domestic currency since it reflects a dollar value”.
He was also impressed that gold did not sell off sharply after a stronger-than-expected US jobs figure and has held up despite oil’s drop to 12-year lows. His higher 2016 price forecast is based on the idea that the US dollar will soften and emerging market demand will improve later this year.”
Other quotes for gold’s 2016 average price range from $1,054 from Barclays to $1,140 commodities consultancy CPM Group. No massive, outsize move in the gold price is being predicted at this time for 2016.
However, the challenges of oil, the Chinese economy and Europe financial stability may yet see the gold price rise more than expected.