Private investors’ sentiment towards gold hits a four-year low

Private investors’ sentiment towards gold hit a four-year low during August despite ongoing geopolitical tensions between Russian and the Ukraine as well as in Iraq.

The gold investor index by BullionVault, which measures the balance of private investors growing gold holdings over those who sold, experienced a slight pull back in August to 51.7 from a previous reading of 51.9 in July.

BullionVault head of research Adrian Ash notes that gold prices, which ended last month unchanged in dollars from July at $1285 per ounce, also appear to have been unaffected by negative headlines from around the globe.

He says: “History shows gold offers financial insurance, not a speculation on other people’s troubles. Despite this summer’s geopolitical headlines, safe haven demand for gold has so far been notable by its absence. Prices remain unmoved by the news from Iraq, Gaza and Ukraine.”

Tensions between Russia and Ukraine have been building for much of 2014 while the situation with ISIS in Iraq have gained momentum more recently in early summer this year but July’s rise in the gold investor index marked the first increase since February 2014.

However Ash also points out that concerns over equity markets and the potential impact of European Central Bank monetary policy have driven the 1.6 per cent rise in gold prices for euro investors and the 1.8 per cent increase against sterling.

“Private investors do continue to grow their holdings – only steadily and quietly on these flat prices. August’s growth was again led by larger accounts, with customers expressing concerns about over-valued equity markets, plus looming central-bank action to try and devalue the euro,” he adds.