Gold : The Only thing Shining

Since October 2023, gold prices have increased 60% to $2900/oz. Ever since the first lockdown in 2020, central banks throughout the world have been focusing on increasing their gold holdings. The major countries like China and India have increased their holdings in tonnage by 30-35%.

Recent changes in the US presidency have increased the uncertainty in terms of trade, inflation and economic growth. This has a direct relation with financial market volatility and the stability of gold prices. The past six quarters have witnessed investment demand of physical bars at or above 200 tonnes per quarter. This was last witnessed in 2012-14 period. 

The demand has been widespread crossing regions and categories. Due to tariff changes, many customers are shifting their physical holding from the UK to the USA. Even the Bank of England confirmed the same and mentioned that its vault holding has reduced by 2% since the start of this year. 

Through speculation, there are some reports that the US treasury is looking to revalue its holding to the current market value. At the current price, it’s holding its value at $800Bn compared to $10Bn valued currently. 

All these indicators and changes are pointing towards a firmer gold price but as always there are certain risks attached as any reduction in geopolitical tensions especially the Ukraine and Russia conflict would reduce the premium on it.