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Investors turning away from gold

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11/04/2008

Gold prices fell at the beginning of April, temporarily sinking below $900 per troy ounce as commodity markets made a hesitant start to the second quarter, according to TD Waterhouse.

This was not the case a few months ago, when investors were stocking up on gold in search of a safe haven for their money. Volatility in gold, which saw prices rise to over $1,000 per troy ounce in recent months, could have caused investors to become nervous.

This could also explain why Rangold Resources, the gold mining and exploration company, comes from nowhere to enter the TD Waterhouse top 10 this week as a top three sale, indicating a possible change in investor sentiment. With gold prices continue to hover in the region of $900-$1,000 per troy ounce investors will be keeping a close eye on their investment over the next few months.

Angus Rigby, chief executive at TD Waterhouse, said: “It seems that investors have gone off the lure of gold in the last week or so. Gold prices fell sharply last week, together with platinum, copper and silver, on the pressure of a rising US dollar, but it will be interesting to see how confident investors are in the months ahead. It may be too early to call a return of investor confidence in general equity investing.

“General commodities became a focus for TD Waterhouse investors this week. Nearly one in 10 trading customers bought into Imperial Energy, placing it in the top 10 buys, although most of the play in the sector was in selling. Companies in the commodities sector accounted for over a third of the top 10 sells this week, as our customers reacted to both long and short opportunities on recent falling prices.

“Elsewhere, it seems our investors are more confident in buying British Airways (BA) shares online than booking flights online. The problems with the opening of Heathrow’s Terminal 5 were exacerbated by extreme weather conditions and impacted the share price. While passengers were left stranded and confused, investors saw a clear opportunity to buy up the grounded shares as BA’s share price went down more than 9% over the last week, resulting in the company re-entering our top 10 buys.”

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