Gold may be losing its Midas touch

WITH all the market disarray amid global headwinds and the spectre of recession in some of the world’s largest economies, gold - a traditional safe haven asset - appears to be losing its Midas touch.

The precious metal, which shines brightest in uncertain times (think wars, pandemics and economic crises, all of which should ring a bell given the current state of play), has lately been at the receiving end of a major bout of selling that has hit riskier assets, chiefly equities. Indeed, it appears that gold is caught in the cross currents, which is impeding its typical countertrend behaviour.

That wasn’t the case earlier this year. Gold had a great start in Q1. The escalating Russia-Ukraine conflict and raging inflation led investors to flock to the precious metal, driving prices past the psychological trigger of US$2,000 per oz in early March. Over the first three months of this year, gold prices surged 8 per cent year-on-year while physical demand jumped 34 per cent - the highest quarterly increase in four years and 19 per cent above the five-year average - according to a report by the World Gold Council.