LIVE MARKETS-Gold's record surge

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

GOLD'S RECORD SURGE

Gold XAU= has surged 40% this year to a record high, driven by expectations for lower interest rates and fiscal expansion, inflation stubbornness and as the metal maintains its status as a safe-haven.

It could be argued the latter point might be undermined as equity markets have risen to record highs and recession risks have faded, but Man Group portfolio manager Albert Chu believes this is offset by escalating geopolitical tensions.

"The arena of war has greatly expanded – future conflicts are fought not only on battlefields, but also on trade tables and through tech competition," Chu writes.

"All these forms of warfare have escalated meaningfully in recent years, providing gold with safe-haven tailwinds."

With the Fed looking certain to lower borrowing costs at its meeting this week and the direction of travel for interest rates looking pretty clear, gold could become even more attractive given it is a non-yielding asset.

Looking ahead, Chu believes that gold's bullish thesis remains intact.

"Given precious metals' strong performance over recent years, investors need to expect some volatility ahead," Chu says.

"But the underlying trends show no serious signs of abatement, and history has repeatedly demonstrated that in such environments, precious metals and real assets play an important role in diversified portfolios."

(Samuel Indyk)

*****

EARLIER LIVE MARKETS POSTS:

EUROPE VS U.S. STOCKS: WHERE NEXT? CLICK HERE

STOXX DIPS, RECRUITERS WEAK AFTER STHREE WARNING CLICK HERE

EUROPE BEFORE THE BELL: BUOYANT MOOD CONTINUES CLICK HERE

FED OPENS SEPTEMBER MEETING WITH INDEPENDENCE UNDER THREAT CLICK HERE