Market News
Central bank body BIS raises concerns of gold and stocks double bubble - REUTERS
By Marc Jones
Summary
- Companies
- Central bank body BIS flags gold market concerns
- Explosive co-movement with stocks not seen for at least 50 years
- Points to 'growing fragility' of risk-on environment
LONDON, Dec 8 (Reuters) - The combination of gold and share prices soaring in unison is a phenomenon not seen in at least half a century and raises questions of a potential bubble in both, global central bank umbrella body, the Bank for International Settlements, says.
While equity markets continue to be driven by AI and tech gains, gold's 60% surge this year is set to be its biggest since 1979, fuelling debate about whether its traditional role as a safe-haven asset has changed.
"Gold has behaved very differently this year compared to its usual pattern," Hyun Song Shin, Economic Adviser and Head of the Monetary and Economic Department at the BIS said as it released its final report of the year on Monday. "The interesting phenomenon this time has been that gold has become much more like a speculative asset."
Dubbed the central bank to the world's central banks, the BIS has given regular warnings about potential stock market bubbles in recent years, but its concern around the co-movement with gold is two-fold. Where would investors shelter if stocks and gold both crash. And what could it mean for central banks and other reserve managers given some have been heavy buyers of gold.
