Gold 1Q20: Portfolio hedge
The gold price rally paused in 4Q19 as global rates recovered from the bottom, lifted by trade optimism. Gold price fell 0.7% (in USD) in 4Q19 after having increased by 14% over the previous three quarters.
A less volatile environment should continue to challenge gold prices in the coming quarter. However, we believe support remains, with an upside bias.
ETF flows picked up strongly, with a broadening investor base. The expansion of negative-yielding debt to a new high was something noteworthy for the past quarter. This phenomenon has not only driven large inflows to gold-backed ETFs, but sources of inflows are also diversified. Europe-listed funds now account for 44% of global holdings, as compared to 2010’s 30%.
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