Rising geopolitical tensions in the Middle East have reignited investor appetite for gold, pushing up the price of gold-backed securities at the Nairobi Securities Exchange (NSE).
As Kepha Muiruri writes in the Business Daily Newspaper, the Absa New Gold ETF gained ground this week, climbing to Sh6,555 per unit from Sh6,230 in the previous session. The move reflects renewed global demand for safe-haven assets following military developments involving the United States, Israel, and Iran, events that have unsettled commodity and financial markets worldwide.
A Safe-Haven Rush
When geopolitical uncertainty rises, investors often rotate capital away from equities and into defensive assets. Gold has historically benefited from such shifts.
International bullion prices jumped more than 2 percent as traders reacted to fears of prolonged instability that could disrupt trade routes, energy markets, and global supply chains. The rally filtered through to Kenya because the ETF tracks global gold prices and the US dollar exchange rate. A stronger dollar further amplifies local price gains.
Unlike equities, which can face earnings pressure during geopolitical shocks, gold is often viewed as a store of value during crisis periods.
How Kenyan Investors Access Gold
The Absa New Gold ETF allows local investors to gain exposure to physical gold without holding bullion. Each unit represents a fractional interest in gold, removing the logistical and storage risks associated with owning the metal directly.
Since its launch in 2017, the ETF has offered a domestic alternative to offshore gold trading. Previously, Kenyan investors seeking gold exposure had to navigate foreign exchanges or deal in physical metal.
The recent uptick in price also highlights the ETF’s strong performance over the past year. From early last year to now, its value has nearly doubled, placing it among the more resilient instruments on the NSE.
Local Equities Remain Steady
Interestingly, while gold-linked securities rose, the broader equity market showed limited reaction. The Nairobi All Share Index (NASI) recorded only a marginal dip, suggesting that local stocks have not yet experienced widespread risk aversion.
Still, global volatility can shift sentiment quickly. If tensions escalate further, more investors may rotate toward defensive assets.
For now, gold appears to be benefiting from uncertainty, reinforcing its traditional role as a hedge when geopolitical risks intensify.
This article draws on a Business Daily article by Kepha Muiruri, along with personal research.
