Gold stayed popular among retail investors as thedollar gained strength as USinflation dwells.- Gold and the
US dollar tend to move inversely to one another, but that relationship has broken down.
Retail investors are more bullish towards gold than ever at the moment, even though the dollar is holding strong, as concerns about US inflation ramps up, according to data from European derivatives trading platform Spectrum
Spectrum said its European Retail Investor Index (SERIX) hit a high of 116 in the past month, indicating the optimism among investors towards bullion, which can serve as a store of value in times of market turmoil or rising inflation. This was the highest such reading since the data series began, Spectrum said.
A reading below 100 on the SERIX data series suggests sentiment is bearish, while a reading above that level indicates bullishness.
"After a period of decline in May that saw the
He added: "Considering the macroeconomic backdrop, it's no surprise to see investors looking to take advantage of a dip in the gold price to make safe haven allocations."
Gold typically tends to move inversely to the US dollar, but growing concern over the global rise in inflation has started to lure investors and prompted this correlation to break down. The dollar index has risen nearly 7% this year, while gold has gained almost 1%.
It comes against a backdrop of rising interest rates aimed at cooling down red-hot inflation that is pervading the global economy. Despite the Federal Reserve trying to control soaring consumer prices by embarking on a series of rapid rate rises, retail investors are cautious and are looking togold as a potential safe haven against inflation, SERIX sentiment data shows.
"With fears of a
Reinforcing a weak economic outlook, the
For gold, this could be a good thing, according to Commerzbank strategist Daniel Briesemann. "We believe this will benefit gold in the long term, as it is likely to come into its own as a store of value in such an environment."
Gold was trading around $1,850 an ounce on Wednesday. It neared record highs above $2,000 an ounce in the immediate aftermath of Russia's invasion of Ukraine in late February, when commodity prices in particular soared.