Insights

John Reade recently joined Fidelity International's MoneyTalk podcast for a conversation on gold.

Gold prices fell in May. Primarily driven by negative momentum impacts as well as lower risk and uncertainty, the SHAUPM in RMB and the LBMA Gold Price AM in USD fell by 1.8% and 3.2% respectively in the month.

Francisco Blanch, Head of Commodities and Derivatives Research at BofA Global Research, joins us for this episode of our Strategic Edge series.

So far in 2022, central banks’ monthly gold reported activity has been bobbing between net purchases and sales linked to a fairly small number of banks. As such, any significant purchase or sale from those can tip the balance in a given month.

Retail investors were enthusiastic buyers of cryptocurrencies last year. A global study by Hall Partners shows that cryptos were one of the most popular investments in 2021, with 31% of respondents investing in them over the first 10 months of the year.

Gold has come under pressure since mid-March, when it was within touching distance of its previous record high.

The international gold price declined in April, led by interest rate volatility and dollar strength. The LBMA Gold Price AM in USD fell by 0.4% and the MCX Gold Spot in rupees (INR) rose by 1% over the month.

The Shanghai Gold Price Benchmark PM (SHAUPM) in RMB rose in April while the LBMA Gold Price AM in USD saw a slight decline.

The resurgence of COVID-19 and the subsequent lockdowns in major Chinese cities since late February have made headlines. These lockdowns are leading to households spending less – especially for discretionary items – as well as saving more due to limited spending opportunities and cautious behaviour.

For a third consecutive year we partnered with Pensions Age to survey UK pension professionals about their views on gold and whether it features in their asset allocation.

Global central bank gold reserves fell by 4t in March (based on latest available data), flipping back to net sales following healthy net purchases of 32.3t in February

Gold prices extended their gain in March, led by higher inflationary pressures and rising geo-political risks. The LBMA Gold Price AM in USD and the MCX Gold Spot in rupees (INR) rose by 1.1% and 1.7% respectively over the month.

Gold prices extended their strength last month. The SHAUPM in RMB and the LBMA Gold Price AM in USD rose further in March, ending Q1 with a 5.2% and 5.7% gain respectively, the largest since Q2 2020.

Global central bank gold reserves fell by 6t in February. This is the second consecutive month of net sales, something not seen since 2020. 

Authored by Johan Palmberg and Adam Perlaky: 

• Gold tends to rally when credit spreads widen…
• …but that’s usually the case when the move in credit spreads is driven by broader systemic risks
• US spreads have only recently begun to widen. Should this environment of higher inflation and geopolitical tension draw itself out, widening spreads are likely to signal further support to gold

Global average All-in Sustaining Costs (AISC) in the gold mining industry were US$1,129/oz in Q4’21, almost unchanged from the previous quarter.

Authored by Krishan Gopaul and Johan Palmberg

• The risk of stagflation has increased materially since we addressed the topic last year
• Europe appears to be at greater risk than the US, due to higher exposure to soaring commodity prices and a weaker economic position, but alarm bells could soon ring across the Atlantic, too
• Year-to-date, gold has performed well, arguably reflecting the Ukraine crisis and the ongoing reflationary environment
• But should stagflation become widespread it could provide further support for gold as a diversifier and risk hedge

Authored by Louise Street and Johan Palmberg: The conventional wisdom that stocks and bonds are negatively correlated is a central component of most asset allocation strategies. But the correlation hasn’t always been negative – far from it, in fact – and there are increasing signs of strain in the relationship, prompting investors to ask: could the stock-bond correlation flip? In this blog, we consider that possibility, what it might mean for the average portfolio, and how gold could help to protect portfolio performance.

Commodities are on a tear in 2022, driven by consumer spending, supply chain issues and most recently, tensions with Russia. 

Gold surged past US$2,000/oz earlier this week, nearly reaching the previous 2020 record. This time, though, it was driven by continued concerns about the war in Ukraine, swelling commodity prices, and, more generally, the potential implications for the global economy. And while the gold price has come down from the week’s high, it’s still approximately 4% higher month-to-date. Against this backdrop, we are addressing the three questions investors have asked us most frequently in recent days.