Synopsis:

ANZ highlights the resurgence of gold as a strategic investment, driven by rising speculative positions and a recovery in Gold ETF holdings. Gold prices have reached a new record above USD 2,500/oz, supported by weaker US economic data, softening inflation, and expectations of significant rate cuts by the Federal Reserve this year. Despite some seasonal weakness in demand from China and India, overall gold demand remains resilient.

Key Points:

• Record Gold Prices:

  • Gold prices have surged to a new record, surpassing USD 2,500/oz.
  • The rise is attributed to expectations of a 100bp cut in the federal funds rate this year, falling yields, and a weaker USD.

• Speculative and Strategic Investments:

  • Speculative positions in gold continue to rise, and Gold ETF holdings are recovering, signaling a return of strategic investment in gold.

• Global Gold Demand:

  • China: Despite a drop in gold imports to 45t in July and the weakest seasonal demand since 2020, H1 2024 imports were 10% higher year-over-year at 851t.
  • India: Gold imports are moderating, but anticipated import duty cuts are expected to boost retail purchases in H2 2024.

Conclusion:

Gold's role as a strategic investment is making a strong comeback, driven by supportive macroeconomic conditions and resilient global demand. The record high prices reflect a confluence of factors including weaker economic data, expectations of rate cuts, and ongoing speculative interest. Despite some seasonal demand fluctuations, the overall outlook for gold remains robust.