First Turkish President Recep Tayyip Erdogan argued citizens should buy gold, then he says sell. Add dramatic swings in the lira, and the country’s traders are now enthusiastically doing both.
Gold futures volumes have surged on the Borsa Istanbul as the volatile currency attracts speculation and after the lira’s plunge boosted the local price of metal. The 90-day average daily volume more than doubled to 40 000 contracts, from about 17 000 in March. During the same time, the value of an ounce of gold in lira rocketed more than 50 percent.
“It definitely would make sense to own gold now in Turkey given the depreciation of the lira,” Jonathan Butler, precious metals strategist at Mitsubishi Corp UK Plc, said by phone.
“This is consistent with gold’s status as a safe haven and will likely be mirrored on the physical market with demand increasing for jewellery and gold bars.”
To be sure, Turkish trading levels are still small by global standards, with a tiny amount of metal changing hands on the bourse compared with major hubs London and New York. Spot gold dropped to the lowest in about 18 months at $1,186.58 an ounce yesterday. Erdogan, who in 2016 urged Turks to convert their foreign-currency savings into lira and gold as relations with the US started to deteriorate, said this week that they should exchange the metal for lira.
Turkey is a significant source of global demand for gold, although it lags well behind the world’s two largest buyers of the metal, China and India. Historically, the country also plays a key role as the home of the ancient kingdom of Lydia, where the earliest known gold coinage originated in the 7th century B.C.
Source : The Herald