Continued purchases of gold by central banks and its attractiveness as a safe-haven asset have helped the precious metal to increase in value by 5.4% in the first half of the year, outperforming most other major assets, except for exchange-traded funds (ETFs).
The second quarter saw a continuation of the positive trend in central bank purchases of gold, although the pace of purchases slowed. The pick-up in investment activity and continued demand from the jewellery sector contributed to a favourable context for the increase in value of this precious metal: 5.4% in the last six months and around 15% in the last twelve months.
In this sense, gold not only brought positive returns to investors’ portfolios and diversification in central banks’ reserves but also cushioned the volatility experienced throughout the first half of the year, especially during the banking debacle in March.
These are the main conclusions drawn from the data presented in the World Gold Council’s report on gold demand this year. The gold price has been volatile during the first half of 2023, but it has been the only commodity with a positive performance apart from lithium, which has also risen in value thanks to the strong demand for electric vehicles.
Persistent uncertainty in the global economic outlook and changes in central banks’ monetary policies are among the main factors that have affected gold demand over the past six months. Growth in demand has been focused on the jewellery and technology sectors, while we’ve seen a slight decline in the popularity of exchange-traded funds (ETFs). This has boosted total gold production, which increased by 7% year-on-year to 1,255 tonnes.
Gold prices could reach a new record high in 2024
Jerome Powell, chairman of the Federal Reserve, said last week that economists at the US central bank do not expect a recession, but they do expect a significant slowdown in the economy by the end of the year. This prediction, along with growing expectations that the Fed is about to end its latest monetary policy tightening cycle, will be a “significant driver” for gold, noted Greg Shearer, managing director of Global Commodity Markets at J.P. Morgan Chase & Co.
According to JP Morgan’s forecasts, the price of an ounce of gold will reach an average value of around $2,012 in the second half of the year, following the trend seen so far, and will reach new records during 2024 when interest rates start to fall. “There really is a strong desire among institutional investors to invest in gold and a need to get rid of currencies,” Shearer said, adding that geopolitical risks have made gold even more attractive to governments.
It seems that the strategy of dedicating 10-20% of the investment portfolio to the gold market is becoming more and more widespread among large investors, governments and central banks, but this financial hedge need not be exclusive to institutional players and large investors as it is also available to everyone.
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Això són molt bones notícies.
Gràcies per donar-nos la possibilitat de poder invertir en aquests tipus d’actius.
La veritat és que sí, almenys això és un valor segur. Gràcies, Manel.
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