Profit-taking in July has reversed into gold buying in August, as investors seek to protect portfolios against the sudden crash in global stock markets amid US recession fears.
Investors reaped the rewards of record gold prices in July, with sales outweighing gold buying by 152kg worth over £9m, according to online marketplace BullionVault.
Its Gold Investor Index revealed that July’s net liquidation was the heaviest since April, and five times the net outflow in June 2024.
However, gold investing has rebounded following ‘Meltdown Monday’, which saw the MSCI World Index slump to a sudden three-month low, and a host of stock markets drop sharply over US recession fears.
BullionVault said there was a “steep pullback” in the price of gold to one-week lows, as it saw net demand reverse half of July’s outflows in just 24 hours.
This adds to the summer’s “political turmoil”, which saw July buck gold’s seasonal pattern of weak first-time buying, led by a surge in France and a rebound in the US.
Indeed, the marketplace for gold, silver, platinum and palladium said July was the strongest for new precious metal investors across its global client base since the Covid crisis of summer 2020, rising 67.6% from a year earlier.
It revealed that ahead of this week’s sudden plunge in world stock markets, the price of gold rose 2.1% in British pound terms across July to set a new month-end price record of £1,889 per Troy ounce.
Adrian Ash, BullionVault’s director of research, said: “With global stock markets previously setting new all-time highs throughout 2024, the combination of record-high gold prices plus high interest rates on cash worked to deter new gold demand while spurring profit-taking among existing investors.
“Now interest rates are falling, the bull market in stocks has hit a pause if not a wall, and gold has retreated from its latest peaks. That clears the way for fresh inflows into the precious metal, most especially from investors wanting to add physical bullion as long-term insurance for their wider portfolio.”
Ash added: “Bullion prices have been rising faster than investors have been selling. That has increased the value of investor gold holdings overall despite the precious metal’s run of new record highs inviting people to take profit.”
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