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Commodities

Gold glittered as safe-haven investment in tumultuous 2016

Yellow metal in demand as shelter from the equities storm

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  © Reuters

TOKYO -- Investment demand for gold soared 70% to 1,561 tons last year as stocks swung wildly on such surprises as the Brexit vote and the rise of Donald Trump.

The total marked the highest since 2012, the World Gold Council said in a report Friday.

The gold market had a volatile 2016 amid such developments as the British vote in June to leave the European Union and Trump's election as U.S. president that November. These so-called tail risks -- unlikely to materialize but with great potential impact if they do -- led gold prices to surge. Meanwhile, the American interest rate hike depressed the commodity.

Overall global demand increased 2% on the year to a three-year high of 4,308 tons, the WGC said. Demand for gold jewelry sank 15% to 2,042 tons amid slowdowns in the two big markets of India and China.

Indian demand dropped 22% because of import restrictions aimed at reducing the trade deficit. Chinese demand slid 17% on higher prices and an economic slowdown in the first half.

Gold purchases by central banks shrank 33% to 384 tons -- the lowest since 2010 -- as foreign-currency reserves dropped.

This year, investment demand for gold is on the rise.

Major speculative investors were net buyers of Comex gold futures to the tune of 109,407 contracts as of Jan. 24, up 2,366 from the week before, according to the Commodity Futures Trading Commission.

(Nikkei)

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