Climate change is both a physical reality and a rapidly growing systemic and existential risk that all aspects of society are currently learning to address. It is now widely understood that greenhouse gas (GHG) emissions must therefore decrease very rapidly – ultimately, to ‘Net Zero’ – if we are to avoid potentially catastrophic consequences. The process of decarbonising the economy is such an urgent priority that it is currently reshaping nearly all policy, business, and investment decisions.
A better gold valuation tool for investors
We launched QaurumSM almost two years ago in response to a vocal need for more robust and accessible gold valuation analytics. While these exist in abundance for other asset classes, gold investors have historically had to settle for something more cursory or incomplete.
Amid strong growth in the economy, a relatively stable gold price and the effective containment of the COVID-19 pandemic, China’s gold jewellery demand in the first half of 2021 totalled 338t.
Gold-backed ETFs (gold ETFs) experienced net outflows in August of 22.4 tonnes (t) (-US$1.3bn, -0.6% AUM), as North American outflows outweighed inflows into European and Asian funds. Gold faced headwinds early in August as the dollar briefly strengthened and rising Treasury yields weighed on investment flows, triggering momentum selling shortly thereafter. Gold prices recovered late in the month, but it did not spur sufficient offsetting inflows, as global holdings fell to 3,611t (US$211bn) – the lowest tonnage level since May.
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.
Higher inflation across Europe in recent months has raised questions over when the European Central Bank (ECB) may begin to tighten monetary policy.
Reflation is good for commodities and even better for gold.
The current global economic landscape indicates improving economic conditions, higher inflation and rates expectations, as well as commodity supply shortages which are likely to support commodity performance.
Equity yields support gold as investors position for historical September strength
Flows into global gold ETFs were marginally positive in July, with inflows of 11.1 tonnes (t) (US$669mn, +0.3% AUM). Inflows into European and Asian funds were mostly offset by outflows from large North American funds. Overall, the positive flows came alongside a recovery in gold prices, particularly in the latter half of the month amid concerns of uncertain global growth outlook and a reaffirmed commitment by central banks to continue easy money policies despite elevated inflation. Global Assets Under Management (AUM) stand at 3,636t (US$214bn), approximately 7% below the October 2020 record tonnage high of 3,909t.
Q2 gold demand flat, H1 down 10%
Strong consumer demand recovery and Q2 gold ETF inflows were not enough to offset heavy Q1 outflows.