Gold outperforming other assets, says Barclays

Gold is outperforming other asset classes and could be set for fresh highs later in the year on a combination of recovering oil prices, rising inflation and a weakening dollar, according to analysts at Barclays Capital.

Precious metals are increasingly diverging from other commodities, they said in a research note released Friday.

Fears over the outlook for the global economy and the stability of the financial system have fuelled buying of gold at the same time as they have knocked the value of other assets.

"Precious metals are not only the best performing commodity sector by a substantial margin (all the rest are in negative territory), but also the best performing asset overall, with stocks and property down sharply year-to-date," said Barclays.

"Buying gold via exchange-traded products shows no sign of slowing and for now is more than enough to offset weakness in jewellery demand," they said. "We expect this buying to continue resulting in gold hitting fresh highs later this year."

Spot gold <XAU=> had risen to 11-month highs of $994.60 by 1312 GMT on Friday as investors spooked by the outlook for the global financial sector bought into the precious metal as a safe store of value.