Recently, in a published Gold Market Commentary [GMC] by World Gold Council [WGC] said, let them eat tariffs! The GMC said, gold prices ended the month of May almost flat (-0.7%) at US$3,278, albeit with some intra-month volatility. Year-to-date, gold remains up a staggering 26%.
WGC said, “Our Gold Return Attribution Model (GRAM) suggests that tariff-related policy risk, a rise in inflation expectations (both Risk and Uncertainty factors) and lagged follow-through from the dollar plunge in April contributed positively, while ETF outflows and the strong gold return in April (both Momentum factors) were drags on returns in May.”
ETF outflows of US$1.8bn (-19t) were dominated by North America (-US$1.5bn, -16t), on a pause in tariff tensions. Following a sizeable drop in COMEX managed money net longs in April, investors increased net positions slightly by the equivalent of US$0.5bn (4t) in May. They remain well off the highs reached in December 2024 (35% net long as a % of open interest) sitting just above 13%.
Talking about Tariff tremors front, the GMC said, a decision by US federal courts to block the Trump administration’s sweeping tariffs lit a relief rally in risk assets on 29 May. However, this might only be temporary as several options appear available to the administration to sidestep the judgement.1 For now we assume little change.
Consensus sees tariffs as ultimately inflationary. Yet only a faint ripple, like in the Jurassic Park water glass, has appeared so far. Official inflation data remains soft but the unofficial Truflation2 inflation measure has picked up firmly. And the reason inflation is expected is that despite the US administration’s steadfast claim that tariff countries will pay, data hasn’t confirmed it yet and markets are unsure.
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