By: Maxwell Gold, CFA, Head of Gold Strategy
Gold Market Recap
March was a banner month for gold as the spot price rose 9.08% and set new all-time highs. Gold began March at US$2,044/oz and continued to rise throughout the month, averaging US$2,157/oz and closing out March at US$2,230/oz, a new all-time high for the yellow metal.1 Gold also saw significant gains in other currency terms including the Swiss franc and Japanese yen which saw increases of 9.31% and 10.02%, respectively, in March as safe-haven buying of gold in key regional reserve currencies continued in 2024.2 With gold’s current momentum, strong demand among key demand sectors among consumers and central banks, on-going global geopolitical tensions, and anticipation for US rate cuts, further strength may be on the horizon throughout 2024.
Gold Performance Drivers
Flows: Global gold-backed ETFs registered outflows in March for the tenth consecutive month. But the pace was much slower, with just a 0.3% reduction in gold ETF holdings compared to the 1.8% drop the prior month.3 COMEX managed money net speculative gold positions remained bullish, rising 242% compared to the prior month, to 135,795 contracts.4
Factors: The US Consumer Price Index (CPI) saw an incremental rise to 3.2% year over year, as of February 2024, compared to 3.1% the month prior.5 The Federal Reserve’s preferred gauge of underlying inflation, Personal Consumption Expenditure (PCE), cooled last month with the core PCE price index rising 0.3% month over month in February, down from 0.5% in January.6 Meanwhile, US 10-year Treasury yields closed March at 4.20%, slightly down from 4.25% at the end of February, with US 10-year TIPS implied real yields remaining below 2% at 1.87% as of March.7
Fundamentals: According to the World Gold Council, the recent gold price surge has added further pressure to gold jewelry demand in India, the world’s second largest gold consumer.8 Anecdotal evidence and media reports suggest that both rural and urban centers have experienced a broad-based drop in demand despite the ongoing wedding season, with jewelers and consumers waiting for a price correction before they add to their stock or buy more jewelry.9
Gold Chart of the Month
Gold Price Trends
Gold ETF Flows
Gold Futures
Originally Posted April 4th, 2024, on State Street Global Advisors’ blog
PHOTO CREDIT:https://www.shutterstock.com/g/macrowildlife
Via SHUTTERSTOCK
Glossary
Consumer Price Inflation (CPI) Index
This CPI represents changes in prices of all goods and services purchased for consumption by urban households on a year-over-year basis.
Gold Spot Price
The price in spot markets for gold. In US dollar terms, spot gold is referred to with the symbol “XAU,” which refers to the price of one troy ounce of gold in USD terms.
LBMA Gold Price PM Index
Provides the price platform and methodology as well as the overall administration and governance for the LBMA Gold Price.
Personal Consumption Expenditures (PCE) Price Index
A measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services. The PCE price index is known for capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior.
Troy ounce (ozt)
Standard unit of measurement for weighing precious metals such as gold, silver, platinum, and palladium.
US Dollar Spot (DXY) Index
The DXY Dollar Index tracks the performance of a basket of foreign currencies issued by US major trade partners, including Eurozone, Japan, UK, Canada, Sweden and Switzerland, versus the US Dollar.
Footnotes
1 Bloomberg Finance L.P., State Street Global Advisors. Data as of March 31, 2024.
2 Bloomberg Finance L.P., State Street Global Advisors. Data as of March 31, 2024.
3 Bloomberg Finance L.P., State Street Global Advisors. Data as of March 31, 2024.
4 Bloomberg Finance L.P., State Street Global Advisors. Data as of March 26, 2024.
5 Bloomberg Finance L.P., State Street Global Advisors. Data as of March 31, 2024.
6 Bloomberg Finance L.P., State Street Global Advisors. Data as of March 31, 2024.
7 Bloomberg Finance L.P., State Street Global Advisors. Data as of March 31, 2024.
8 World Gold Council, “India’s gold market update: high prices dent consumer demand,” as of March 19, 2024.
9 World Gold Council, “India’s gold market update: high prices dent consumer demand,” as of March 19, 2024.
Disclosures
Important Risk Information
This communication is not intended to be an investment recommendation or investment advice and should not be relied upon as such.
The views expressed in this material are the views of the SPDR Gold Strategy Team through the period ended March 31, 2024 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.
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