Gold, driving investments now are Europe and the US

The hunger for gold is beginning to be satiated in China but is awakening in the West, offering fresh support to bullion prices, which yesterday returned close to $2,520 an ounce on the London spot market, up 1% and not far from the all-time record ($5,31.60, touched on 20 August).

The handover of the baton on the investment front is confirmed by the World Gold Council (Wgc), according to which China has stopped accumulating gold even through Etf. A stop that comes on top of the drop in jewellery consumption and the pause in the accumulation of gold reserves: the Chinese central bank has been at a standstill since May, after having made purchases for 18 months in a row. For the Etf the change of course came in August, when assets fell by 3.8% after eight months of positive flows: there were net redemptions of $291.8 million, equivalent to 90.2 tonnes of gold.

In the markets of Europe and North America (the largest and most mature), however, buying continued last month, confirming a very recent turnaround that was crucial in restoring sap to a demand segment that gold had lost support for more than two years, in parallel with monetary tightening by the Fed and other central banks. Now the wind has changed. And the expectation of imminent interest rate cuts has reawakened Western investors' interest in bullion. It is thanks to them that Etf assets on the metal grew globally again in August, for the fourth consecutive month (to 3,182 tonnes, worth $257.3 billion), up 28.5 tonnes ($2.1 billion). Since the beginning of the year, flows remain negative by 44 tonnes, but the discontinuity is clear: there had never been a lull in redemptions in the West from July 2023 to May 2024.

In North America in August there were net purchases for the second month in a row (+1.4 billion), in Europe - where flows have been positive since May - assets rose by a further 362 million. The boost, the Wgc notes, also came from hedging strategies triggered by the strengthening of exchange rates against the dollar.

Expectations on the Fed and the weakening of the US currency are also the most logical explanation for the strong speculative interest attracted by gold at the Comex: between July and August net long (buying) positions increased by 17%, reaching 917 tonnes at the end of the month, a record since February 2020. The bullish bets - worth $59 billion - are mainly in the hands of hedge funds: the money manager category went 'long' on gold for 737 tonnes, up 25% in one month and 71% above the average for the first half of the year, notes the Wgc.