Bloomberg
Gold has a new lease on life. For now, anyway.
Gold, one of the biggest losers of 2013 with its whopping 28% decline, is on the upswing as tremors in emerging markets rekindle the investor appetite for safe havens that was lacking for much of the last year.
As central banks in emerging markets try to slow an investor retreat and global equities markets swoon, some investors think gold is a decent spot to wait out the chaos. Futures are up 1.3% at $1,266.40 an ounce, on track for a two-month high.
“Gold becomes the ultimate currency” in environments like this, gaining along with safe-haven stalwarts like the Japanese yen and Treasurys, says Bill O’Neill, a principal with commodities trading firm Logic Advisors,
Still, gold has a long way to go to regain investors’ trust. Gold exchange-traded funds, a popular vehicle in recent years for investors to gain exposure to gold, haven’t seen big inflows despite the rebound in prices so far this year.
“You have problems in Argentina, Turkey, Brazil, India,” Mr. O’Neill said. “There’s been myriad financial and currency related problems around the world, and gold really hasn’t been able to break out.”
Futures are up 5.2% this month, which would be the third-best monthly performance since gold slipped into its current bear market. But that’s well short of the 10% surges gold posted in recent years when the Federal Reserve was ramping up bond purchases and Europe’s debt crisis flared.
With the Fed expected to further throttle back its purchases, gold’s rebound may be short-lived.