Gold finished January on an all-time-high of US$2,812, up 8% on the month, adding another positive start to its strong seasonal record. All-time-highs were logged across the board in major currencies.
According to our Gold Return Attribution Model (GRAM), almost all drivers contributed positively including a large rise in the Geopolitical Risk index (GPR), with the only major drag coming from the lagged momentum effect of a strong US dollar in December.
Global gold ETFs secured a US$2.6bn (30t) gain in AUM, driven almost exclusively by strong inflows into European gold ETFs (+US$3.4bn, 39t) – likely aided by a European Central Bank (ECB) cut that took bund yields down quite dramatically over the course of the month.
US funds lost US$500mn (6t), Asian funds pared US$320mn (4t) while other ETFs managed small inflows totalling US$51mn (1t). COMEX managed money net longs added US$64bn (150t) to positions with a large increase in longs and a small cut in shorts.
China saw evidence of strong start to an auspicious year of the snake for gold. Historically, February is positively correlated to January performance, so augurs well. German elections might be flying under the radar for many given the noise around US tariffs, but the elections could trigger a much more positive growth outlook.
This in turn could support the euro vs. the US dollar in the process. A weaker US dollar is not a consensus view, but unforeseen pressure on it could herald further support for gold. This said in the recently published, Gold Market Commentary, by World Gold Council (WGC); “January review say, Gold finished the month on an all-time-high in all major currencies, with tariff fears, a weaker US dollar and bond yields all contributing.”
In the looking forward statement, the WGC said; “Chinese gold market activity appears to have stayed true to its seasonal pattern and suggests follow-through into February. German elections might put further pressure on the US dollar.”
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