The price of gold skyrocketed by 16.5 percent to $1,235 an ounce in the first quarter, the largest quarterly gain seen since 1986.
While the markets have rallied since the start of the year and the March jobs report was stronger than expected, the jump in gold sales appears to reflect buyers’ uncertainty in the economy and reluctance to take risks in bonds or stocks.
“This is one of the most surprising gold rallies I have ever seen,” Ira Epstein, a strategist at the Linn Group, told The Wall Street Journal.
Traditionally when market confidence is low, investors tend to steer towards safer investments like gold and silver due to their lack of volatility.
“A combination of safe-haven demand on the back of worries about China in particular, a scaling back of expectations of further rate hikes from the Fed, and rising inflation expectations … have been behind the rally in the gold price,” Capital Economics analyst Simona Gambarini told Reuters.
Gold mining stocks are also shooting through the roof, with Barrick Gold Corp. up more than 70 percent since the start of 2016.
The price of gold could go up even more due to the Federal Reserve choosing to slowly raise interest rates, weakening the dollar. Metals Focus predicts prices could shoot up to $1,350 an ounce in the fourth quarter, The Financial Post reported Thursday.
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