Recently, the World Gold Council (WGC) published their Gold Market Commentary and said, Gold finishes October on a high! In the October in review,
key takeaways from WGC is
1: gold gained 6.8% in October, reversing an early-month slump to finish at US$1,997/oz, the highest daily close since May and a record monthly close for the LBMA gold price PM.
2: Safe haven flows driven by geopolitical tensions partly captured by strong inflows into COMEX futures and ETF options were likely behind the move. While in a Looking forward;
WGC highlighted,
1: COMEX net shorts reversals are a historically reliable positive signal for gold prices, and have tended to lead ETF flows.
2: A sustained rally in gold will in our view require either: continued or worsening political risk, a peak in bond yields and the US dollar, or an equity bear market combined with revived recession risks.
Gold Market Commentary-WGC remember the October as, a record month-end finish! Gold prices started the month on the back foot, having fallen below US$1,850/oz at the end of September. The events in Israel on 6 October set a rally in motion that took the US dollar price back up above US$2,000/oz by 27 October.
The record-high monthly finish was mirrored in almost all other major currencies. Our gold model GRAM attributed the bulk of this move to the residual, in this instance likely capturing a spike in geopolitical tension, which we discussed in a recent blog. The large contribution from a rise in implied volatility and breakeven inflation rates as well as the strength in the Swiss franc (not in our model) pointed to safe-haven flows as a dominant motive.
In addition, COMEX futures also weighed in, with short covering (-87t) and new longs (+84t) taking net longs higher by 171t (US$11.3bn). Despite positive flows in futures, global gold ETFs saw another month of outflows (-US$2.2bn, -38t), two thirds from North America and one third from Europe. By the end of the month, flows appeared to have troughed with a small pick up towards the end of the month partly driven by options expiry in the US.
Heera Zhaveraat (HZ International) A Diamond, Watch and Jewellery Trade Promotion Magazine provide dealers and manufactures with the key analytical information they need to succeed in the luxury industry. Pricing, availability and market information in the Magazine provides a critical edge.
