UNITED STATES September 20 2016 2:10 PM
NEW YORK (Scrap Register): Barclays anticipates investor demand for gold will persist on concerns about the global economy, with the bank also saying investment in commodities generally should hold up.
Barckays reports that some $54 billion has flowed into commodity exchange-traded products and index investments so far in 2016. However, if expectations were to shift suddenly, then a rush for the exit could send prices sharply lower, Barclays said, referring to commodities in general.
“Although we cannot rule out that risk entirely, we think the key themes that have supported commodity investments in the year to date should ensure continued inflows over the next few years and that the risk of large-scale liquidation, even if commodity markets disappoint in Q4, is limited,” analysts at Barclays added.
Analysts pointed out that much of the money invested in commodities has been strategic portfolio allocations, with investors unlikely to change their minds hastily even if performance is not as strong for the remainder of the year. Second, global yields remain low.
“Third, the key factors that have boosted gold demand recently, i.e., investors’ concerns about the stability of the global economy, uncertainty in financial markets and a desire to hedge against unexpected events, are unlikely to dissipate any time soon,” Barclays said. “Consequently, investor demand for gold, at an all-time high this year, is likely to persist in our view.”