Sun, Sep 10, 2017 - Page 14 News List

Everything ‘buy’ as bonds, gold lure bumper inflows

Bloomberg

Inflows were back with a vengeance the first week after the summer break as investors piled into everything from gold and government bonds to equities and high-yield credit.

Global funds that invest in gold, equities and bonds netted inflows of US$11.6 billion for the week that ended on Thursday, Bank of America Merrill Lynch said in a research report, citing EPFR Global data.

Precious-metal funds added the most in 30 weeks, while bond portfolios posted a 25th straight week of inflows.

Investors had a multitude of signals to react to in the first week of post-summer business as usual.

While rising political risks, including North Korean nuclear tests and US hurricanes sent some investors rushing to haven assets, fresh signals from the European Central Bank that it is prolonging monetary stimulus gave a boost to riskier securities.

Central bank asset purchases, which have totaled almost US$2 trillion this year alone, are the “best explanation” for money flowing into both bonds and stocks, the Bank of America analysts said in their note.

Investors poured US$1 billion into the largest exchange-traded fund backed by bullion last week, the most since the middle of last year.

The precious metal traded at the highest level in more than a year on Friday amid growing tensions between the US and North Korea.

Gold for December deliver settled at US$1,351 per ounce on Friday, up 1.5 percent for the week.

Gold futures have jumped more than 17 percent this year, on track for the biggest annual gain since 2010.

Prospects for economic damage from hurricanes menacing Caribbean islands and the southern US added fuel to the rally this week.

“Gold continues to be a price barometer of the well-being of the economic and political world,” George Gero, a managing director at RBC Wealth Management in New York, said in an e-mail. “This attracted many buyers who prefer normally to be in stocks and other assets.”

Copper rose as high as US$3.18 per pound this week, up 44 percent in the past year.

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