Spotlight on: gold
Following a number of less favourable years for gold, 2016 has thus far been kind to the precious metal. After continual growth since the turn of the millennium, gold peaked at around $1,900 an ounce in 2011, but plummeted in the subsequent years to only a little over $1,000 towards the end of 2015. In light of the recent growth, however, those in the field are divided as to whether things will continue to get better in the near future.
Since January this year, a sudden rise in the price of gold to over $1,300 an ounce has resulted in the top eight funds in terms of performance over the past year all being gold funds. As a result of uncertainty surrounding both the EU referendum and Chinese slowdown, investors have viewed gold as something of an insurance policy against threatened inflation and volatile stock markets and as such have poured their money into gold funds.
With their investments having paid off, the question now is whether or not it’s time to cash in the profits made or remain invested for further growth. As the price of gold is heavily dependent on the feelings of those invested in it, a split amongst experts has emerged.
Some argue that gold continues to provide safety for investors during times of volatility, so allocating funds to the precious metal remains a good idea to offset any unexpected negative shifts in the market.
Others advise more caution on the basis that the reasons behind the current healthy price of gold are far from clear. As a sentiment driven commodity, gold value is often not linked to supply and demand in the way that many other raw materials are. Whilst some with a less optimistic view see little chance of considerable gains being made through investment in gold, others see the likelihood of rising interest rates as the factor that will drive gold prices back down.
Conflicting opinions on what is likely to happen to the precious metal in the near future, coupled with the varied nature of the factors impacting upon its price, make predicting what will happen next difficult for investors.