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Investing in a dollar-denominated asset with no yield was never going to be an easy sell. But with equity markets in turmoil, interest in gold has been rising steadily once again.

Gold was seen as a safe haven after the 2008-09 financial crisis, rising to $1,900 an ounce in 2011 before falling back to a low of $1,077 in July. Research by BullionVault, a peer-to-peer gold exchange, reveals nearly half of gold and silver retail investors predict the gold price will end 2015 at least 10 per cent higher than it was at the start of the year. Whereas the 1970s bull market was driven by inflation, this year it has been uncertainty, particularly over the state of the Chinese economy, that has brought investors back to gold.

In the short term, however, recent events have shown gold to be volatile. As the US economy continues to recover, making a rise in interest rates more likely, pressure on the gold price could continue. Trying to predict its level is a fool’s game, driven more by sentiment than fundamentals. Yet in times of turmoil, gold resurfaces as a potential safe haven, confirming its appeal to investors concerned about the strength and sustainability of the economic recovery.

Copyright The Financial Times Limited 2017. All rights reserved.

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