Investment Commentary

A bumper month for gold, driven by ETF flows, futures flows and options activity helped cement August as the third strongest monthly return in a quarter century. Looking forward, central bank intervention may be on the cards, but absent a credible fiscal plan, it is likely to reinforce gold’s appeal

Investors have long recognised the role commodities can play in diversifying portfolios and providing inflation protection. Gold, however, occupies a unique position within the commodities universe. Its distinctive market structure, long-term return profile, diversification benefits, inflation-hedging characteristics and deep liquidity support its role as a strategic asset in its own right, rather than simply a component of a broad commodities allocation.

Positive momentum factors offset negative risk factors to leave gold prices unchanged in July. A second wave of high inflation, similar to the late 1970s, cannot be ruled out. But it does not imply a major gold rally on its own. That depends on how real rates, the US dollar, growth expectations, Asian investor demand and central banks respond.

Total gold demand, including OTC, was unchanged y/y at 1,269t in Q2. This took demand for the first half year to 2,522t (+2% y/y), with a record value of US$380bn.

In one of the most dramatic starts to any year, gold soared to record highs in January, crossing above US$5,500/oz intraday before pulling back to US $4,000/oz in late June. Down roughly 7% year-to-date, gold nonetheless ranks among the top performers over the past year, as other assets play catch-up.

Gold fell 1% in May, on continued positive risk sentiment and modest global gold ETF outflows. The Fed may need to hike rates as inflation pressures mount. We make the case for why it could – surprisingly – benefit gold.

Indonesia's investment landscape is navigating a confluence of pressures in 2026. Headline inflation is rising, driven by global energy price shock stemming from the Middle East conflict; Bank Indonesia has abandoned its rate-cut guidance, and domestic equities have suffered a shock following MSCI's threat to downgrade Indonesia from Emerging Market to Frontier Market status. Against this backdrop, gold remains a compelling asset for both institutional and individual investors.

Gold ended April flat, as a return of risk appetite weighed on gold, but a weaker US dollar and ETF inflows led by Europe provided support. Short term headwinds could sustain some gold weakness as it searches for a catalyst to regain the structural uptrend.