Gold hits two-year high as investors become increasingly anxious

Global gold holdings have expanded by more than 500 metric tonnes since bottoming in January in a signal of investors’ rising concern about slowing growth, a Federal Reserve that’s probably on hold and the ructions caused by Britain’s vote to quit the European Union, reports The Independent.

Assets in bullion-backed exchange-traded funds rose 6.6 tons to 1,959.1 tonnes on Friday, up from 1,458.1 tons on January 6, according to data compiled by Bloomberg.

The holdings increased 37 tonnes last week as investors reacted to the UK’s vote, and swelled in five months out of six in the first half.

Bullion prices climbed to the highest level in more than two years in June as investors absorbed the implications of the UK result, adding to a rally that’s been driven by the Fed’s hesitation in raising borrowing costs and the spread of negative rates in Europe and Japan.

Banks including Goldman Sachs Group raised their outlooks for gold after the vote, while yields on 10- and 30-year US Treasuries have touched record lows.

“The low-yield environment globally, and increased volatility in the financial markets as a result of a number of key geopolitical developments, have increased the appeal of gold as an investment and safe-haven asset respectively,” said Vyanne Lai, an economist at National Australia Bank Ltd. The push-back in the markets’ expectations for the timeline of further U.S. rate hikes suggests further upward potential for prices, she said.