Demand for gold doubled on one major platform in May as crypto crashed, casting doubt on bitcoin as an inflation hedge
Golddemand rose and prices moved sharply higher in May as inflationfears came to the fore.
cryptocurrenciescrashed, dealing a blow to the argument that bitcoinis "digital gold."
- Analysts said the
Federal Reserve's stimulus had also helped support the gold market.
Demand for gold jumped more than 97% in May while prices moved sharply higher, a leading metal-trading marketplace said, as investors looked for shelter against rising inflation.
BullionVault, which manages $3.9 billion of precious metals, said it saw demand for gold almost double in May as investors made larger allocations to the asset, to its highest level in four months. It said the total quantity of gold owned by its users rose to a record high.
"Any debate about crypto replacing gold as a core portfolio asset just got a very blunt answer," said Adrian Ash, director of research at London-based BullionVault.
Ash said it's impossible to say whether investors sold bitcoin to buy gold, however.
He said a key driver of gold's rise was investors' worries about inflation. In the US, consumer prices shot up 4.2% year-on-year in April, according to data released in May that unnerved
"Gold is a classic inflation hedge and as such, some of the moves away from growth stocks are most likely to end up in this ultimate store of value," said Richard Hunter, head of markets at investment platform Interactive Investor.
One sign of investor appetite for gold has been a marked rise in total holdings in gold exchange-traded funds, according to Saxo Bank. At the same time, the metal's price has been supported by ultra-loose monetary policy from central banks.
The Danish bank's head of commodity strategy, Ole Hansen, said in a note that one driver has been the Federal Reserve's "tsunami of liquidity" which has held bond yields down and sent investors looking elsewhere.
Ash said May's cryptocurrency crash was evidence that bitcoin can't be trusted to hold its value when inflation threatens to erode other assets.
"There's volatility and then there's bitcoin - or crypto, more broadly," he said. "[Gold] has never halved in value inside a week."
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