Article by Ira Iosebashvili and Amrith Ramkumar in The Wall Street Journal
Investors are piling into precious metals at the fastest clip in years, driven by a plunge in global bond yields that has fueled a search for assets that can hold their value during troubled times.
Gold purchases by everyone from central banks to retail buyers have boosted the metal to its highest level in six years, with a coterie of famous investors now touting its role as a haven from market turmoil.
Instead, a deepening trade war between the U.S. and China has weighed on the outlook of nearly every major economy, adding pressure on many central banks to further cut rates—even those that already stand below zero.
That has raised the allure of gold and other precious metals. While these nonyield-bearing assets struggle to compete with bonds when the outlook for the world economy is stable, their appeal has risen as negative rates have proliferated in Europe and Japan.
“There is so much flight to safety right now and metals is where a lot of that money is going,” said Bob Haberkorn, senior commodities broker with RJO Futures in Chicago.
“Traders that had been out of the metals market are coming back…and there’s been a lot of buying from new accounts,” Mr. Haberkorn said.
Meanwhile, falling yields and growth fears have dragged a long list of currencies, from the euro and British pound to the Chinese yuan, to their lowest levels in years. Unlike currencies, gold and other precious metals aren’t under the sway of any global central bank, further heightening their appeal.
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