Gold prices experienced a slight increase on Tuesday, remaining close to the record high reached last week. As of 0355 GMT, spot gold had risen by 0.2% to $2,387.11 per ounce, following its peak of $2,431.29 on Friday. Similarly, US gold futures saw a 0.9% increase, reaching $2,403.90.
The rise in gold prices on Tuesday was reported by Reuters, noting that they remained within proximity of the record high achieved the previous week. At 0355 GMT, spot gold showed a 0.2% increase, reaching $2,387.11 per ounce, following its peak of $2,431.29 on Friday. Concurrently, US gold futures rose by 0.9% to $2,403.90.
The WGC’s Gold Return Attribution Model (GRAM) indicated that risk and momentum factors were responsible for the upward movement. “Of particular significance was gold’s implied volatility, which surged during March — similar to occurrences in September 2022, March 2023, and October 2023, although this time it occurred without a concurrent increase in bonds’ implied volatility,” stated the report.
In March, investments into gold ETFs were observed in all regions except Europe. The Geopolitical Risk (GPR) index rose once more, driven by geopolitical tensions escalating on various fronts. “From a macro perspective — despite buoyant markets and a relaxed Fed — there was a notable convergence in US data surprises, hinting at the possibility of stagflation risks resurfacing, a development supportive of gold prices,” the report highlighted.
With India, the largest consumer of gold globally, entering election season, the WGC anticipates minimal market activity during the six-week polling period. “Moreover, a reduced wedding season in India suggests that, all else being equal, there should be no significant pent-up demand from Indian consumers in June,” added the report.
Despite gold reaching record highs, many would assume that market positioning is overcrowded, as it was in 2011, for example. However, the WGC stated that this is not the case. “When assessing gold ETFs as a percentage of total US ETF assets under management, we found their percentage share to be at the fourth lowest level since inception. Although past performance does not guarantee future returns, it is noteworthy that the last time positioning reached these levels, gold experienced a substantial upward movement with significant support from global gold ETFs,” the report explained.
Gold is currently at an all-time high and attracting attention. However, assets at such levels pose challenges for investors who fear they may have missed the opportunity. “Nevertheless, our analysis suggests that gold is currently well supported by fundamentals, and the limited involvement of US investors, in particular, bodes well for the continuation of the rally, unlike what was observed in 2011,” the report concluded.
