Insights

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.

The local Chinese gold price premium has been surging lately: September’s average reached the highest monthly level for nearly six years.

Gold plays an important role in the management of reserve assets, being one of the few assets that are widely approved under the investment guidelines used by the world's central banks.

Healthy retail demand in September drove the local price briefly into premium, but market dynamics generated a discount for much of the month. Indian gold ETFs witnessed a marginal net inflow of 0.4t in September as a domestic gold price correction enticed investors back into gold  
 

In Q2’22 costs in the gold mining industry continued rising. The average all-in sustaining cost (AISC) reached a new record high of US$1,289/oz, up 3% q/q and 18% y/y. The average industry AISC has now sequentially increased almost every quarter since Q2’20, rising by 33% over this period.

Central bank net purchases of gold slowed to 20t in August, halving m-o-m. This is the fifth consecutive month of net purchases from the central banking sector.

Many of the investors we talk to feel that gold’s performance should be much stronger considering multi-decade high inflation across the world

The Shanghai Gold Price Benchmark PM (SHAUPM) in RMB rose by 0.5% in August while the LBMA Gold Price AM in USD saw a 2.6% fall. The average Shanghai-London gold price spread climbed further in the month, driven by stronger demand