Capital.com reports traders returning to Gold as market turns risk averse

Karthik Subramanian

Capital.com, an FX broker that uses machine learning to read trade data and present better trading choices and options, has revealed that trading in gold has picked up during July while trading in meme stocks and crypto has suffered a dip during the same period, according to the trade data available with the platform.

This marks a big change in the behavior of the traders who, until last month, had preferred meme stocks and especially crypto trading while gold volumes were lagging far behind. There are multiple reasons for this change which include the fact that the crypto prices have dropped off a lot during June and July and the market has been ranging during this period which has led to lower volatility and hence the dip in interest.

Also, inflation and risk have been a factor in this as traders have chosen to be risk-averse due to the ongoing pandemic which has been taking its time to recede across the globe.

David Jones, Chief Market Strategist at European investment trading platform, Capital.com said: “The nagging worry for investors at the moment is still inflation. This goes some way to explain activity by our clients this week – Gold was one of the top-traded assets by our users. Traditionally seen as a hedge against inflation and uncertainty, the yellow metal hit its best levels for a month on Thursday (15 July 2021) – although it is still around 12% off its all-time high set last August.”

Capital.com is an FCA-regulated entity that has a presence in different parts of the globe and the company says that it grew its client base by over 700% during the year 2020. This has helped it to generate a lot of stats surrounding the trading by its users and this points to a global liking for gold over the last month or so which has helped the global prices pick up speed and move higher after a bearish-ranging period. It is expected that this would continue in the coming months as well though the dollar is expected to get stronger towards the end of the year as the US stops printing. This is likely to be loved by the gold bulls who have been on the sidelines for long as the crypto industry has hogged all the limelight over the last year or so. With crypto prices falling and the crypto bulls taking a breather, the attention has now shifted to other instruments.

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