Investors Fleeing China’s Stock-Market Turmoil Seek Safety in Gold

China’s stock-market volatility is driving up the price of gold as investors seeking safety pile into the yellow metal, reversing expectations that the price would slump this year in the wake of a strengthening dollar.

“If there is continued weakness in stocks, then we expect gold prices to move higher,” said Seamus Donoghue, Chief Executive at Allocated Bullion Solutions, a Singapore-based international bullion-trading network. When a large equity market such as China loses so much in a single day, “there will be a flight to quality assets,” he added.

“The equity market volatility will definitely help allocation to gold. The market has discounted the impact of dollar strength and the U.S. interest rate hike for now,”

A Hong Kong-based banker whose company is a large supplier of bullion to the region said the switch to gold was gathering pace not only in China, but other countries in the region as well.

Investors Fleeing China’s Stock-Market Turmoil Seek Safety in Gold