The capacity oforo to defy gravity in the midst of rising returns real Americans continues and on Tuesday hit its two-month high while the investors continue to rediscover the appeal of gold in a context of high volatility of the stock market, inflation that is far from transitory and concerns about growth. This is highlighted by an analysis by BG SAXO.
The rally of the previous two years
The small drop of last year’s gold, after an extraordinary one rally 48% in the previous two years, it was driven by the long-term liquidation of wealth managers amid strong equity markets and low volatility, as well as a belief that rising inflation would prove transitory and would not pose a long-term threat to growth and growth. price stability.
The change of course of the FED
Towards the end of last year, a great change within the FED of the United States after President Biden’s team probably made it clear to Powell that to stay at the head of the institute, he would have to focus on the 150 million American workers who see their pay eroded in real terms each month by the Fed’s inaction on the inflation, rather than focusing on supporting the economy to help fight unemployment. Both Powell and Brainard (the incoming Vice President) have complied with this directive, and their new attitude has helped drive up US 10-year real yields. L’oro was traded at discount earlier this month when real yields rose, but an underlying supply has slowly pushed prices higher since then. There are several reasons for the recent shift in focus, and aside from the current geopolitical concerns supporting a small supply, there are other and larger factors emerging.
The investor’s strategy choice
The perception of gold as a hedge frominflation and how asset defensive have received renewed attention as stock market volatility increases amid rising interest rates. Over the past month, gold has shown increasing immunity to rising real yields with investors focusing instead on hedging their portfolios from the risk of slowing growth and falling stock market valuations. Increases in taxi even more aggressive could end up being positive for gold as they will further increase the risk of a Federal Reserve policy error as recession risks grow. Total holdings in bullion-backed ETFs rose the most from September 2020 to a three-month high at 3,083 tonnes over the past week.