In August 2024, gold continued its spectacular run from July, closing the month with a notable 3.6 per cent achieve at USD 887.98 per 10 grams, in line with the World Gold Council (WGC).The dear metallic reached a brand new all-time excessive on August 20 earlier than experiencing a slight decline because the month drew to an in depth.
In response to the Gold Return Attribution Mannequin (GRAM), the first driver of gold’s ascent was a considerable drop within the US greenback.
This was coupled with a lower in 10-year Treasury yields, because the Federal Reserve signalled potential fee cuts. Nonetheless, gold’s rise was considerably tempered by a momentum issue. Traditionally, a powerful efficiency within the earlier month usually results in a weaker return within the subsequent month.
A growth in August was the discount of import duties on gold in India, efficient from late July. This coverage change has spurred a surge in gold demand throughout the nation. Studies point out a powerful uptick in shopping for curiosity from each jewellery retailers and customers.
Moreover, world physically-backed gold ETFs noticed their influx streak prolong to 4 months, with Western funds contributing the vast majority of the flows.
The present macroeconomic atmosphere is characterised by a mixture of contradictory financial information. The approaching US presidential election provides an extra layer of uncertainty, prompting elevated investor exercise in choices markets. Gold choices spreading positions have surged to multi-year highs, reflecting a market preoccupied with each a possible rate-cutting cycle and election outcomes.
Globally, financial indicators current a blended image. GDP development stays regular at 2.5 per cent, with composite PMIs in constructive territory.
The Federal Reserve’s current indicators at Jackson Gap, indicating attainable rate of interest cuts, have left short-term fee markets largely unchanged.
Markets have priced in practically 100 foundation factors of cuts by year-end, anticipating additional labour market weakening. Fed Chair Jerome Powell emphasised that the timing and tempo of fee cuts can be data-dependent, navigating between preemptively avoiding a recession and managing inflation dangers.
Investor behaviour has shifted in the direction of choices markets, with elevated flows into fairness choices surpassing earlier highs.
This pattern is mirrored within the gold choices market, the place choices spreading positions have risen considerably. Historic information means that such spikes usually correlate with both rate of interest coverage shifts or main market occasions.