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The price of gold exchange-traded funds at the Nairobi Securities Exchange (NSE) has risen to a new historical high of Sh2,840. This is due to the emergence of new geo-political tensions in the form of the Israel -Hamam conflict.
The price of gold exchange-traded funds at the Nairobi Securities Exchange (NSE) has risen to a new historical high of Sh2,840. This is due to the emergence of new geo-political tensions in the form of the Israel -Hamam conflict. Absa New Gold ETF unit price rose from Sh2,530 recently in line with the hike in international gold prices. The gold spot price has reached highs last seen at the start of the Russia-Ukraine war in early 2022.
The rise in gold prices is attributable to investors opting for safer haven investments beyond government securities such as US Treasuries as the chance of an escalation of the conflict to the wider Middle East is factored in. Given gold is the underlying asset in the trading of the gold ETF, gold prices at the NSE have risen in tandem.
The uptick in price is in response to a likely rise in demand and the ETF adjusting to gold trends. When faced with such (geopolitical tensions), investors often run to preserve purchasing power because of the ripple effects involved including disruptions in the supply chain and stubbornly high freight fees. Investors at the NSE are able to buy listed gold debentures which each equate to 0.01 of an ounce of gold via the ETF. Globally, spot gold traded at $1,982.96 (Sh297,000) per ounce last Friday.
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The ETF was first listed on the Johannesburg Stock Exchange in 2004 before secondary listing in markets including Botswana, Nigeria, Mauritius, Namibia and Ghana. Trading of the debentures at the NSE commenced in 2017 when the then Barclays New Gold ETF floated 400,000 units at a price of Sh1,205.16 each. As of May 2023, the ETF was majority-owned by foreigners at 89.88 percent representing the ownership of 280,600 units.
