According to the trading activity recorded on high-growth investment trading platform Capital.com, trading in popular meme stocks and cryptocurrencies has dropped month-to-date, while trading derivatives on gold has seen a resurgence.

In the first two weeks of July 2021, gold was the most traded market by clients on Capital.com globally. Gold remained the top-traded market for seven out of 11 trading days this month (between 1-15 July 2021). This marks a significant shift in trading behaviour from the previous month where trading activity in gold was less popular compared to trading activity in so-called meme stocks and cryptocurrencies. 

In June, Gold was the most traded market in just one out of the 22 days (between 1-30 June 2021), while derivatives on AMC and cryptocurrencies made up the rest of the month’s most traded markets on the Capital.com platform. Cryptocurrencies are not available to clients who are resident in the UK. 

The pickup in trading derivatives on gold reflects a wider change in trader sentiment as markets turn more cautious this week.

David Jones, Chief Market Strategist at European investment trading platform, Capital.com said: “The nagging worry for investors at the moment is still inflation.  This goes some way to explain activity by our clients this week - Gold was one of the top-traded assets by our users. Traditionally seen as a hedge against inflation and uncertainty, the yellow metal hit its best levels for a month on Thursday (15 July 2021)  - although it is still around 12% off its all-time high set last August.

"This was despite, or perhaps, because of, comments by the Federal Reserve Chairman Jerome Powell saying that inflation had notably increased, and would stay relatively high for a few months before returning back to normal. It has been a frustrating time for gold bugs in the past 10 months, with investors lured away by stock markets continuing to grind higher.The rise in the price of gold this week may be a suggestion that some traders think that this temporary inflation aberration may last a little longer than central bankers expect.

"The Bank of England this week struck a more cautious tone with the Deputy Governor for Banking and Markets suggesting that the central bank had underestimated the rapid bounce in inflation. I don't think this worry is going away anytime soon and it is something that could deliver some market volatility as the year goes on. Investors may have become complacent at the relative calm we have had this year and if history teaches us anything about markets it is that it seldom stays like that for long.”