La Française: What is the outlook for gold in the coming months?
Since 2022, the price of Gold has been supported by strong demand, coming from the jewellery industry (around 40% of demand), and above all from emerging country Central banks eager to diversify their foreign exchange reserves.
Small investors (even from emerging countries) are also eager to protect their savings by investing directly in gold bars and coins. For example, Indian farmers, thanks to strong farming revenue growth this year, bought gold to ensure good luck during the Diwali season. During the summer of 2024, several financial indicators, such as low US - real interest rates, more accommodative monetary policies (especially from the FED), etc. were positive for gold.
Furthermore, as uncertainties continue to grow regarding the global economic slowdown, the China-United States trade war, US elections, Middle East and Russia-Ukraine Wars, etc., demand for Gold ETFs soared in June, becoming positive for the first time in several years.
ETF Investors, which are namely North American and European, are eager to protect and diversify their portfolios against uncertainties and financial market volatility. As an alternative, they also invest in gold mining equities due to their strong correlation with gold price.
We remain positive on gold for the coming months. Several central banks have reiterated their interest in increasing their gold reserves, and strong uncertainties persist; two factors supporting gold prices.