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Gold investment up amid uncertainty over Brexit and US election

Published 08/11/2016

Total gold demand fell by 10% compared with a year earlier at 993 tonnes
Total gold demand fell by 10% compared with a year earlier at 993 tonnes

Gold investment rose in the third quarter as political uncertainty around Brexit and the US presidential election sent investors running towards safe haven assets.

Total investment demand rose 44% to 336 tonnes in the three months to the end of September compared with the same period last year, the World Gold Council's latest report shows.

Total gold demand - which takes jewellery and purchases by central banks into account - fell 10% compared with a year earlier at 993 tonnes.

Exchange-traded products (ETP) - which track the price of a specific asset like gold and provide exposure without necessarily requiring a physical holding - accounted for a strong proportion of gold investments at 146 tonnes.

It marks the third consecutive quarter of ETP inflows, which the report said were "predominantly driven by ongoing economic and geopolitical uncertainty, ahead of the US election and also in Europe post the Brexit referendum decision".

Alistair Hewitt, head of market intelligence at the World Gold Council, said investment will continue to be fuelled by political concerns beyond this week's US presidential election and into the new year.

" Even when we do get through this week, investors will be looking ahead and they will be seeing Dutch, French and German elections, even possibly Italian elections, next year."

Mr Hewitt said the rise of fractious, nationalistic parties " just add in a greater degree of uncertainty for institutional investors".

Investors, he said, "have been very, very adept at managing political uncertainty in emerging markets, but this is becoming increasingly an issue for developed markets, and that's been a major factor underpinning inflows into exchange-traded funds".

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