UK property now no.1 safe-haven choice as gold prices surge?

UK property now no.1 safe-haven choice as gold prices surge?

As gold prices hit a three-month high, should those investors looking to reduce their exposure to global uncertainty consider buying UK property instead?

Summary:

  • Global gold prices have hit three-month highs amid global political and economic uncertainty
  • Investors rushing to add the metal to their portfolios helped spot gold prices hit $1,234.20 per ounce on February 7th
  • If metal prices continue to surge, will more investors consider adding resilient and high-performing UK real estate to their portfolios to combat market volatility in 2017?

The rush for safe-haven assets is causing gold prices to peak – so should more investors begin exploring other assets with a low correlation to volatile stocks and shares over the next 12 months?

Earlier this week (February 7th), global gold prices hit highs last recorded in November 2016, as ongoing uncertainty in the US and Europe prompts investors with equity-heavy portfolios to take action.

Spot gold hit $1,234.20 per ounce, while US gold futures stood at $1,236.30 per ounce. On Wednesday (February 8th), indexes held the gains of the previous day, with spot gold even edging up by a further 0.1% in early morning trading.

Commenting on rallying gold prices, Jiang Shu, Chief Analyst at Shandong Gold Group, explained: “The biggest momentum behind gold is the fact that the Fed did not raise rates in the recent meeting, some uncertainties brought by US President Donald Trump’s policies and a weaker dollar.”

After the final six months of 2016 created landmark political events that rocked financial markets, there’s already been key indicators in the first weeks of 2017 that suggest that investors should be prepared for more fluctuations over the next 12 months. Most notably has been the controversial travel ban imposed by President Trump, along with the rise of anti-establishment politics in Europe ahead of key election dates in the coming months.

It’s meant more are looking to reduce their exposure by acquiring traditional safe-haven assets such as gold. But with prices surging, should investors be looking for alternatives?

The strength of the UK property market is underpinned by key supply and demand fundamentals. This week the UK government published its Housing Whitepaper, which outlined the chronic shortage of available property in Britain.

Like gold, UK property has a proven track record of delivering strong long-term growth in the form of capital appreciation. But, unlike the metal, investors can also achieve annual returns through yields.

A rising population of tenants is expected to increase average UK rental rates by 17.6% over the next four years, and by 20.5% in Manchester, the city with Britain’s highest yields from property investment.

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