Transitory or not, inflation is already impacting consumers
Gold fell slightly during August, down 0.6% in US dollars, on modestly firmer interest rates following strong US jobs data.
Gold fell in September by 4% to around US$1,743/oz. This was the second consecutive month of declines, with gold now over 8% lower y-t-d. Gold wasn’t alone. Treasuries, Corporates, US- and non-US equities all fell in September possibly as a result of deleveraging. The Q2 level of margin debt for equities was at a record high. It would be understandable if some leverage has been removed as we head into the historically volatile month of October. And it’s quite possible that this de-leveraging has affected most assets (energy and industrial metals excepted).
We believe that mandatory hallmarking will be positive for India’s gold market, improving transparency and giving consumers more confidence in the purity of the gold they buy.
Gold rose slightly in October, despite a risk-on environment and increases in short-term bond yields
Gold rose 2% in November based on the LBMA reference price, rallying early in the month before giving up most of those gains in the following weeks.
Gold may face similar dynamics in 2022 than those from last year as competing forces support and curtail its performance.
The LBMA Gold Price PM (US$) was marginally down in January, dipping less than 1% to US$1,795/oz. But this provides an incomplete picture of the interesting dynamics seen throughout the month.
Geopolitical crisis takes centre stage in February
Gold rose for the second consecutive quarter in Q1, ending 8% higher at US$1,942/oz – its best quarterly performance since Q2 2020.
Throughout April, gold remained among the best performing assets in 2022 up 5% in US dollar terms – yet it ended the month 1.6% lower at US$1,911/oz.