The gold price has been surging, with unprecedented central bank demand gobbling up supply. It has been a force to behold — especially as US monetary policy has been relatively tight since 2022, and 10-year Treasury yields have rocketed up, which generally puts firm downward pressure on gold against USD.
When clients ask about the timing of selling their gold, I generally respond to their question with a question: “Do you have upcoming liquidity needs?” or “Is there a productive investment opportunity to deploy your capital?”
While broader macroeconomic trends are always what’s most significant for the gold price during any given election, some interesting trends emerge when you look at the numbers. And when an election is contentious, historic, or chaotic as 2024’s promises to be, the outcome is all the more significant for gold.
There is plenty of bad news out there. We have a trade war. Geopolitical tensions between the US and Iran and the US and Russia are high. Turkey is in the midst of a currency crisis that some fear will spread beyond that country’s borders. So, why aren’t people seeking safe haven and buying gold and silver?
The CEO at Australia’s Perth Mint has a theory. Richard Hayes said bad news has become so prevalent nobody really pays attention to it anymore. In a nutshell, bad news has become the norm. As a Bloomberg report put it, “Investors have grown immune to the economic and geopolitical risks that typically drive haven demand for gold.”
The price of gold in pounds spiked Monday as Brexit confusion and political instability sent Brits scampering into safe havens.
Spot gold against the pound rose nearly 1% after Brexit Minister David Davis and British Foreign Minister Boris Johnson both resigned their posts in protest.
Business Day described Brexit as a “ramshackle exit from the EU,” as a European Central Bank policymaker warned it could damage economic growth in the eurozone.
Indians are hoarding their gold despite an increase in the price during the first quarter of 2018. Analysts say they are holding onto their gold in anticipation of bigger price increases.
Gold was up around 1.5% in dollar terms in the first quarter of this year. According to the Economic Times of India, the yellow metal appreciated 4.41% in rupees.
Even with that healthy increase, old gold sales in India fell by 35-40% in Q1 2018 compared to the previous quarter. According to the paper, analysts and traders think Indians are holding back selling in anticipation of further price increases, especially if the US and China get into a full-blown trade war.
Over the last year, we’ve talked a lot about geopolitical risk. Could turmoil around the world now be the new normal?
Some analysts think so.
