Gold is making a comeback as stock market turbulence across the world drives investors into safe havens.
Bullion for immediate delivery has shot up 17 per cent this year to US$1,242.16 an ounce as at 8pm yesterday, outperforming global stock and bond markets.
That has helped send Singapore's two listed gold miners and a gold-backed exchange-traded fund (ETF) soaring while a third miner is eyeing a Catalist listing.
On Thursday, when the gold price recorded its strongest intra-day rise since 2009, the gold counter at UOB Plaza became a "hub of activity", said Ms Beh Hsia Wa, director of UOB Bullion and Futures.
"We have seen an increase in the number of retail customers realising their investment gains by selling back their physical gold to us at a higher price than when they had bought it," she said.
The SPDR Gold Shares ETF has gained 13.2 per cent in Singdollar terms this year. Gold miner Wilton Resources has gained 20.7 per cent and CNMC Goldmine is up 27.7 per cent. Although gold is far from its 2011 peak of US$1,890 an ounce, the precious metal is posting its strongest start to a year since 1980 on safe-haven buying amid market sell-offs and a falling greenback.
Phillip Futures senior commodities manager Avtar Sandu said: "The United States is going to slow down with their interest rate hikes - the market is expecting the next hike no earlier than December."
The US dollar is losing some of the strength it gained at the end of last year, making a stronger case for investors to hold on to gold, although the metal pays no dividends. Which is not so bad, given that a rising number of institutions, like the European Central Bank, are charging negative interest rates, while many others have their rates close to zero.
Even central banks were buying more gold. Central bank purchases of the metal rose 25 per cent to 167 tonnes in the fourth quarter, as they saw a greater need to diversify amid a "tumbling oil price and reduced confidence in the global economy", said a World Gold Council report.
The last six months of last year also posted the strongest second half-year demand for gold jewellery in 11 years, the report said.
But gold's January gains on Chinese demand ahead of their New Year do not typically last into March, Bloomberg data showed.
"Normally, demand tapers off about now," said Mr Sandu. "In India, the wedding season - September to December - is over... The only good reason for the Chinese to buy gold now is that it is better to hold gold than to hold yuan (which is on a devaluation path)."
Most analysts predict that gold's rally will be over soon. Mr Sandu sees it trading at around US$1,280 in the next few months.
Then again, the metal has already outrun their forecasts for the first two months of this year.