August rally lifts gold to near record high
Gold on Tuesday reached its highest level since June and ended the session within $9 of its all-time closing high, continuing to benefit from investors’ worries about the global economy’s next turn.
Near-term gold futures in New York rallied $11.20, or 0.9%, to $1,248.30 an ounce, bringing the gain for August to 5.6%.
The metal is on track for its fifth straight weekly advance, and needs to rise just 0.7% to match its record close of $1,257.20 on June 18.
The SPDR Gold Shares Trust, the most popular gold exchange-traded fund, rose $1.17 to $122.08 on Tuesday. The fund, designed to track the price of bullion, is up 13.8% this year -- a gain that beats most of the other alternatives likely to be in the average investor’s portfolio.
Gold and bonds have won at the stock market’s expense this summer as investors have sought relative safety amid a raft of data pointing to a slowing U.S. economy.
Although gold historically has been viewed as a hedge against inflation, this year’s bigger concern -- deflation -- hasn’t deterred buyers, as I noted in this post.
One scenario that could cause people to abandon gold in droves would be a rebounding economy without inflation pressures, accompanied by a rising dollar.
Absent signs of that scenario on the near horizon, many investors may continue to see gold as an insurance policy against a lot of worse outcomes.
-- Tom Petruno