Gold funds saw a stunning influx of $3 billion last week, marking the second-largest inflow on record and a staggering triple the average weekly flow in recent months as investors keep on pilling into the precious metal.
These inflows have helped propel gold prices to a 33% year-to-date rally, positioning the precious metal for its most exceptional year since 1979, according to the economics outlet Kobeissi Letter. As a result, gold’s market capitalization has soared to a new all-time high of $18.4 trillion.
Concurrently, central banks have been aggressively adding gold to their reserves, with the percentage of total currency reserves allocated to gold reaching 12.1%, the highest level in over three decades.
This collective buying spree by both individual and institutional investors signals a growing confidence in gold as a safe haven asset amid increasing economic uncertainty and as geopolitical tensions keep on rising.
The surge in demand for gold can be attributed to several factors, including geopolitical tensions, inflationary pressures, and concerns about the global economic outlook. These factors saw central banks buy over 1,000 tonnes of gold in 2022 and 2023.
Notably, Societe Generale has shifted 100% of its commodity allocation to gold, driven by geopolitical risks and a weakening broader commodity market.
The French bank increased its gold holdings to 7% of its total asset allocation, reflecting a 40% quarter-over-quarter rise. This pivot toward gold signals growing confidence in the yellow metal as a safe-haven asset amid ongoing uncertainties in global markets.
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