The starvation for gold is starting to be satiated in China however is reawakening within the West, providing new assist to the costs of the bullion, which yesterday returned to shut to 2,520 {dollars} an oz on the London spot market, up 1% and never removed from the historic report ($5,31.60, reached on August 20).
The passing of the baton on the funding entrance is confirmed by the World Gold Council (WGC), in accordance with which China has stopped accumulating gold additionally via ETFs. A cease that provides to the drop in jewellery consumption and the pause within the accumulation of gold reserves: the Chinese central financial institution has been stopped since May, after having made purchases for 18 months in a row. For ETFs, the change of course got here in August, when property fell by 3.8% after eight months of optimistic flows: there have been web redemptions for 291.8 million {dollars}, equal to 90.2 tons of gold.
Shopping within the West
In the markets of Europe and North America (the most important and most mature), purchases continued final month, confirming a really current pattern reversal, essential to reinvigorate a phase of demand that gold had misplaced assist for over two years, in parallel with the financial tightening of the Fed and different central banks. Now the wind has modified. And the expectation of imminent curiosity cuts has reawakened Western buyers' consideration to the bullion. It is due to them that the property of ETFs on the steel grew globally additionally in August, for the fourth consecutive month (to three,182 tons, for a price of 257.3 billion {dollars}), recording a rise of 28.5 tons (2.1 billion). Since the start of the 12 months, flows stay damaging by 44 tons, however the discontinuity is obvious: within the West there had by no means been a truce in redemptions from July 2023 to May 2024.
In North America, August noticed web purchases for the second month in a row (+1.4 billion), whereas in Europe – the place flows have been optimistic since May – property rose by one other 362 million. The push, notes the WGC, additionally got here from hedging methods triggered by the strengthening of trade charges towards the greenback.
Expectations on the Fed and the weakening of the US foreign money are additionally essentially the most logical clarification for the sturdy speculative curiosity attracted by gold on the Comex: between July and August, web lengthy positions (at buy) elevated by 17%, reaching 917 tons on the finish of the month, a report since February 2020. Bullish bets – price 59 billion {dollars} – are primarily within the palms of hedge funds: the Money Manager class went “long” on gold for 737 tons, +25% in a month and 71% greater than the typical within the first half, notes the WGC.
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