The price of Absa Bank’s gold-backed éxchange traded fund (ETF) hit an all-time high of Sh2,075 on Wednesday, with investors reaping big as the value of the precious metal continues to rise globally.

Geoffrey Odundo, Nairobi Securties Exchange (NSE) chief executive said ETFs allow investors to spread their risk, diversify their portfolio as well as have ease of purchase and exit.

“Globally, gold has emerged as one of the most reliable safe havens of wealth, remaining largely unchanged in the long run despite the short-term market volatilities. Gold can be used to hedge against inflation, deflation and currency risk,” Odundo added.

The development signals that investors are looking for new investment opportunities witnessed by the recent oversubscription of government bonds and Kenya Mortgage Refinancing Company (KMRC) housing bond.

Flight to safety

It also comes at a time when the NSE has been underperforming for nearly three years presenting fewer opportunities.

The purchases are also being driven by the global flight to safety following the Russia-Ukraine crisis that has pushed up commodity prices.

Low growth of private credit also shows heightened credit risks that has seen most Kenyans increase their deposists.

The gold is traded at the NSE under the Absa New Gold éxchange traded fund and the price is derived from real-time value of gold in the world markets. A statement released by NSE said that the gold ETF also recorded an all-time high turnover of $851,858 on a volume of 44,000 units.

Gold steadied yesterday as the Russia-Ukraine conflict kept investors on their toes and buoyed demand for safe-haven bullion, countering pressure from an uptick in riskier assets, while supply concerns pushed palladium to a seven-month peak.  

Oil refineries

Ukraine’s second-biggest city, Kharkiv, suffered heavy bombardment on Wednesday, while a fresh round of sanctions by the United States was bound to make it harder for Russia to modernise its oil refineries.