Recently, the World Gold Council, published, Gold Market Commentary (GMC), Select elections and Fed on a dime. The GMC said, gold prices retreated to US$2,048/oz by the end of February, a 0.3% m/m fall. Nonetheless FX volatility has ensured that y-t-d returns remain positive in four of the major currencies.
As per our Gold Return Attribution Model (GRAM), a sharp move higher in the US 10-year Treasury yield (+34bps) appeared to be the major culprit in driving gold lower -understandable given the barrage of positive inflation and economic surprises over the past two months.
Aggressive risk-on positioning driven by continued outperformance from the Magnificent Seven (Mag7), amid the AI frenzy, also likely contributed to gold’s lacklustre performance this month. But the gold price staged a comeback on the last day of February, since when it has moved above US$2,100/oz.
In a looking forward view, the GMC said,
1: Iran’s parliamentary elections shouldn’t in themselves create waves, but the country’s consumers are major gold buyers and their elections could pave the way for an important political secession.
2: The March Fed meeting is important: it will provide investors, following a slew of strong data, with the first set of dot plots since December’s dovish tilt. Even though markets have priced out a cut, the argument for is as vehement as the argument against. Uncertainty reigns in monetary policy.
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.
