Insights

Record central bank gold buying last year shone a spotlight on the past, present and future of gold as a reserve asset. There are compelling reasons to expect continued buying from this sector

A ceiling on interest rates and headwinds to trend growth make a compelling case for gold in the medium term.

A spate of bank failures in March could be the first serious cracks to appear as a result of unprecedented monetary tightening. As a crisis hedge, gold is responding as expected. Read more here…

Gold prices weakened in February. There was a 5% decline in the LBMA Gold Price AM in USD during the month. Meanwhile, due to a 3% depreciation in the RMB against the dollar, the SHAUPM in RMB saw a smaller fall of 1%

As inflation continues to bite, the risk of stagflation has not disappeared.  As a reaction, gold has been attracting attention from Australian investors due to its historical superior returns during such periods.

Central bank gold demand in 2023 picked up from where it left off in 2022. In January, central banks collectively added a net 31t to global gold reserves  (+16% m-o-m).

Gold prices kicked 2023 off to a strong start. The SHAUPM in RMB registered a 2% gain in January and the LBMA Gold Price AM in USD rose by 5%.

In December, central banks have reported adding a net 28t of gold to global reserves, down sharply (53%) from the previous month (60t).

The international gold price shot up by 3% in December to US$1,812/oz, supported by expectations of a less-hawkish US Fed in the light of lower yields and dollar weakness.

Intensifying expectations of a less-hawkish US Fed bode well for international gold prices during the last month of 2022. While the SHAUPM in RMB rose 1% in December, the LBMA Gold Price AM in USD capped a 3% gain.

Central banks bought a further 50 tonnes (t) on a net basis during the month, a 47% increase from October's (revised) 34t.

The international gold price jumped by 7.4% in November to US$1,760/oz, boosted by lower yields and dollar weakness.

The divergence between the RMB and USD gold prices widened. The weakening US dollar and lowering yields helped pushed the LBMA Gold Price AM in USD 7.4% higher in November, the best month since July 2020.

Average all-in sustaining costs (AISC) in the gold mining industry increased by 1% q-o-q in Q3’22, reaching a new record high of US$1,289/oz.

Central banks continue to accumulate gold according to the latest data available. In October – data is lagged by two months – central banks added a further net 31t of gold to international reserves (-41% m-o-m).

The ESG revolution is well underway, but investors and companies continue to grapple with how to effectively measure the ‘S’ in ESG.

The domestic gold price diverged from the international gold price: the MCX Gold Spot price rose marginally by 0.2% compared to a 2% decline in the LBMA Gold Price AM in USD

Gold’s price divergence continued: the Shanghai Gold Price Benchmark PM (SHAUPM) in RMB rose by 1%, while the LBMA Gold Price AM in USD saw a 2% fall in October.

UK financial markets have gone into full-blown crisis in the last few weeks. The government’s ‘mini-budget’ announcement on the 23rd September was poorly received by global investors, leading to a sharp spike in UK government bond volatility.