The amount of cash invested in gold funds has jumped by one-third since the beginning of the year, as investors become more and more desperate to squirrel their money away in safe havens.
Data from Bloomberg showed holdings in bullion-backed exchange-traded funds (ETFs) swelled to 1,959 tonnes at the end of June, up from 1,458 at the beginning of the year, with a flurry of new investments off the back of the UK's decision to leave the EU.
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ETFs invest in gold bullion but allow people to buy and trade a slice of the fund as individual shares, rather than having to invest directly in gold bars. Gold prices hit a two-year high in June, and the precious metal is now trading at just above $1,350 a tonne, up 26 per cent since the start of the year. Prices have risen by $91 a tonne alone since the referendum.
Yields on government bonds – another safe haven asset – have also plummeted due to a spike in demand, while the Japanese yen, seen as a defensive currency, has surged.
"It's the desire for security and the fact that other safe havens are yielding lower returns, and thus, on the margin, gold is more attractive," said Michael Hsueh, commodities strategist at Deutsche Bank.
"We're likely to see these trends continue until the perceived risk of recession recedes, we get a string of better economic data, stronger growth, less demand for bonds and higher returns for equities – all those things you associate with a stronger recovery," Hsueh added.