Investment Commentary

So far in 2024, China's gold jewellery consumption weakened notably while investment demand for gold saw sizeable increases. Looking ahead, potential stability in the economy and possible further stimuli should help trim gold jewellery demand weakness, expected declines in yields and a likely weaker local currency may support gold investment demand.

The start of November saw gold pressured by higher opportunity costs and a Republican clean sweep. Stronger bond yields and US dollar, risk-on in equities, a boost to cryptocurrencies and quelling of geopolitical risk might see a near-term retracement in gold.

While gold’s contribution to managing portfolio risk is well established, its contribution to portfolio return is not. Our analysis shows that gold responds to both an economic and a financial component. And that its long-term return is not only well above inflation but more closely linked to GDP than previously understood.

Gold posted a 3.6% gain in August driven by lower rates and a weaker US dollar. Mixed data releases have made the direction of global economy less certain and gold options indicate that investors may be hedging against a combination of more aggressive rate cuts and US election uncertainty.

The traditional Defined Contribution (DC) investment portfolio comprising equities and bonds made a comeback recently, delivering returns not seen for years. But faced with ongoing geopolitical risks and a highly uncertain economic backdrop, we examine how gold is uniquely placed to play an important diversification role in pension fund portfolios and how gold can help pension funds mitigate a key risk – investment risk, inflation risk and longevity risk.

Gold posted a 3.6% gain in August driven by lower rates and a weaker US dollar. Mixed data releases have made the direction of global economy less certain and gold options indicate that investors may be hedging against a combination of more aggressive rate cuts and US election uncertainty.

In response to the improvement in coverage ratios over the past year, an increasing number of Swiss pension funds are contemplating their investment approach given the breadth of macroeconomic challenges ahead.

Interest rate volatility in Australia has risen sharply recently, pushing up a traditional 60/40 portfolio’s risk. And the elevated inflationary risk – despite recent cooling signs – has weakened bonds’ role as a traditional portfolio risk diversifier. We believe gold’s consistent low correlation with Australian equities and attractive return prospect will benefit local portfolios.