Market Commentary

Despite economic uncertainty in some regions, the gold price declined in the first half of 2015. While puzzling to some investors, this is consistent with market expectations that the risks could be contained. 

Trish Regan sits down with William Rhind, CEO of World Gold Trust Services, to talk about his outlook for the commodity in current market conditions.

India has an ambivalent relationship with gold. For consumers, gold is a prized asset, cherished as both an adornment and an investment. For the government, gold is a major contributor to the current account deficit, a challenge that needs to be addressed.

This edition of our Investment Commentary examines gold’s performance year-to-date and explores relevant macroeconomic factors that can influence gold’s performance into Q4 2014.

This seventh edition of Gold Investor discusses gold’s positive link to economic growth, explore its value as a hedge in times of duress, and discuss the impact that ETFs have had on the gold market.

Gold is up by 9.2% so far this year. This surprised many market participants as most analysts predicted lower prices. Some investors took advantage of last year’s price correction to buy gold but investment demand has remained tepid. We consider that the current environment of high bond issuance, tight credit spreads and record low volatility continues to offer a prime opportunity for investors to add gold. In our view, gold can reduce overall portfolio risk and it is cheaper to implement than many volatility-based strategies.

We view the direction of the US dollar as well as the strength of Asian demand as key indicators of gold sentiment. Further, potentially reduced mine production at lower prices should, in our view, limit the downside. Finally, our research shows that gold should not be looked at in isolation but as part of portfolio and that a small strategic allocation can reduce the long-term level of risk.

A central bank that wishes to buy gold can do so locally, by purchasing domestically-mined or recycled gold. Alternatively, gold bars can be bought directly from a bullion bank in the global over-the-counter, or OTC, market. 

This fourth edition of Gold Investor includes two articles: I. Why Invest in gold? Gold’s role in long term strategies; II. Gold and currencies: the evolving relationship with the US dollar.

The role of gold and its benefits have been largely debated within the investment community. Throughout its two articles, Gold Investor highlights the benefits of investing in gold in the context of investment portfolios and details the past, current and future relationship between gold and the US dollar.

As more pension funds around the world opt for defined-contribution structures and move away from defined-benefit plans, contributors will not receive the same guaranteed payouts seen in the past. A comfortable retirement will be based on the combination of careful planning and a thoughtful investment strategy.