Gold lost 3.7% in September, with the bulk of the move occurring during the last three days of the month.
As per the Gold Market Commentary by World Gold Council, gold lost 3.7% in September, with the bulk of the move occurring during the last three days of the month. We attribute gold’s challenging month to an extensive run up in bond yields alongside a stronger dollar. The sell off at the end of the month was also likely the result of a strong adverse reaction to US economic data, a fall in the Chinese local premium and a negative technical breach.
September saw continued net outflows (US$3bn, 59t) from global gold ETFs, extending their losing streak to four months. unds listed in North America led outflows followed by Europe while Asia continued to see inflows. Overall, investors’ intensifying expectations of rates staying “higher for longer” drove disinvestment in western markets. Y-t-d, holdings have declined by 5%, while total assets under management (AUM) are 2% lower due to the mitigating effect of the higher gold price.
Looking Forward
With bond yields continuing to move higher alongside a still buoyant US economy, gold is likely to face continued turbulence over the next few weeks. But we don’t see a material down trend being established as support remains from fragile equities, rising recession risk, inflation volatility and continued central bank interest in gold. This could represent a buying opportunity to some investors should the market become excessively short.
