ANZ Research discusses Gold outlook and expecst macroeconomic headwinds to persist through the end of the year.

"Investment demand has remained resilient, with gold-backed ETF holdings rising by 7t so far in October. Economic and political uncertainty in Europe continues to support investment demand, while Asian buyers have stepped up purchases to hedge against falling equity markets. Investors are increasingly looking beyond rising rates and focusing on concerns over global debt sustainability.

Central bank buying was strong in the third quarter. China has purchased more than 100t year-to-date, including around 20t in each of the past three months. China’s official gold reserves is now around 2,410t, or 9% of total reserves. China imports have also risen by more than 70% y/y to 1140t.

Markets are currently pricing in only a 20% probability of a Fed rate hike in October, but roughly an 80% probability of a hike in December. Minutes from the latest meeting showed that policymakers supported the September hike, while most expected another increase to be appropriate by year-end. We therefore expect macroeconomic headwinds for gold to persist through the end of the year," ANZ adds.