Flight to safety sets gold price on six-day surge

Investors worried about the safety of banks are increasingly turning to gold.

Investors worried about the safety of banks are increasingly turning to gold.

According to ETF Securities, physically backed gold exchange traded commodities (ETCs) are the most traded ETCs year-to-date and now total $4.5 billion (£2.63 billion).

The group says net inflows into its physically backed gold ETCs amounted to $93m over a six-day period last week, the largest increase over the past 10 weeks.

BlackRock has also experienced increased inflows into its £1.4 billion Gold and General fund.

Evy Hambro, fund manager in the BlackRock natural resources team in London (pictured), says: “Gold for many thousands of years has been a means of exchange and a great way to store your wealth.

“A gold bar is nobody else’s liability and is often turned to in periods of political and economic uncertainty. Gold is a natural place for people to turn to during these times.”

Hambro adds: “Over the short term gold always responds to what’s going on in today’s market.

“But over the medium to long term the underlying fundamentals have a bigger part to play in the price. These drivers are the more important ones and they will prevail. Supply is one of the key drivers, that’s why production is falling.”

According to Hambro, the BlackRock Gold and General fund has seen strong inflows this year, and particularly in the past week.

The price of gold rose for six consecutive days, reaching over $920 an ounce on October 10. One month ago gold was just over $750. Meanwhile, the FTSE 100 index fell as much as 10% in one day. Investors’ continuing search for safety has also driven up the price of gilts.