SINGAPORE – Global gold holdings have expanded by more than 500 metric t since bottoming in January in a signal of investors’ rising concern about slowing growth, a Federal Reserve that’s probably on hold and the ructions caused by Britain’s vote to quit the European Union.

Assets in bullion-backed exchange-traded funds rose 6.6 t to 1 959.1 t on Friday, up from 1 458.1 t on Jan. 6, according to data compiled by Bloomberg. The holdings increased 37 t last week as investors reacted to the UK’s vote, and swelled in five months out of six in the first half.

Bullion prices climbed to the highest level in more than two years in June as investors absorbed the implications of the UK result, adding to a rally that’s been driven by the Fed’s hesitation in raising borrowing costs and the spread of negative rates in Europe and Japan. Banks including Goldman Sachs Group Inc. raised their outlooks for gold after the vote, while yields on 10- and 30-year US Treasuries have touched record lows.

“The low-yield environment globally, and increased volatility in the financial markets as a result of a number of key geopolitical developments, have increased the appeal of gold as an investment and safe-haven asset respectively,” said Vyanne Lai, an economist at National Australia Bank Ltd. The push-back in the markets’ expectations for the timeline of further US rate hikes suggests further upward potential for prices, she said.
Gold Rallies

Gold for immediate delivery traded 0.8% higher at $1 351.60 /oz at 1:55 p.m. in Singapore, up 27% this year, according to Bloomberg generic pricing. It rallied to $1 358.54 on June 24, the highest level since March 2014. Spot silver has also jumped.

Gold holdings in ETFs, which peaked at 2,632.5 t in 2012 as central banks ramped up stimulus to resuscitate growth after the global financial crisis, have now rebounded to the highest since August 2013. ETFs trade like shares, and allow investors to buy and sell bullion without taking physical delivery.

Goldman raised its three-, six and 12-month bullion targets by $100 /oz last month, citing a flight to safety by investors, while Singapore-based Oversea-Chinese Banking Corp. has flagged the potential for bullion at $1 400. Gold will probably extend gains as Britain’s vote adds to the case for the Fed pausing, according to hedge-fund startup Academia Capital LLC.
Fischer’s View

Fed vice chairperson Stanley Fischer last week made a strong case for policy makers to do nothing at their July meeting, according to comments to CNBC. Futures wagers tracked by Bloomberg show investors see no chance of a raise this month, and only 12% odds of an increase by December.

The rally in gold has aided producers’ shares. Evolution Mining Ltd. Executive Chairman Jake Klein told Bloomberg last week that gold may stand at the start of a major bull market. Evolution’s Sydney-listed stock rallied as much as 8.9% on Monday following an 11% jump on Friday.

“Brexit has created all sorts of fear and loathing across markets,” Commonwealth Bank of Australia said in a note on July 4, adding that investors are cutting back on risk. “Gold and silver, as we would expect, benefit the most from safe-haven demand flows.”