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Qatar Tribune
10 hours ago
- Business
- Qatar Tribune
Is there further upside for gold prices?
Gold occupies a unique role in modern investing. It generates no cash flow, incurs storage costs, and has limited industrial utility – yet it continues to hold enduring appeal among households, sovereigns, and institutional investors. Gold's historical legacy as a monetary anchor has recently intersected with a more contemporary function: risk mitigation. This demand for gold has been supported by the idea that the yellow metal provides a key utility as a portfolio diversifier protecting against inflation, financial crisis, international conflicts and civil strife. Importantly, gold's resilience in the face of economic shocks, such as the Great Financial Crisis (GFC) of 2008-09 or the Covid-19 pandemic, underscores its role as a hedge against systemic risks and macroeconomic instability. In recent years, gold has rallied significantly, a process that has accelerated over the last few months. In fact, before the most recent pullback, gold prices reached $3,500 per ounce, making sequential all-time highs for months. After such significant rally, which amounts to 114 percent in price appreciation since the pandemic and 92 percent since the Russo-Ukrainian conflict began, it is natural that analysts and investors would question whether there is still more upside for gold over the coming years. In fact, gold has decisively outperformed all major asset classes, challenging the perception that it merely serves as a defensive hedge. A sustained outperformance highlights that gold, while traditionally valued for its safety during crisis, can also generate robust returns under different macroeconomic conditions. Gold's consistent gains relative to equities, bonds, and commodities since early 2020 suggest that it merits consideration not only as protective allocation but as strategic, return-enhancing asset within a diversified portfolio. This dual characteristic – providing resilience during uncertainty while also delivering meaningful capital appreciation during periods of higher investor risk appetite – further strengthens the case for gold as a core holding. This is especially valid for environments of elevated inflation, currency de-basement, foreign exchange depreciation, or systematic market volatility. In our view, despite the surge in prices, there is still further upside for prices over the medium-term, as global macro conditions are favourable for gold. Two main factors sustain our position. First, gold's appeal has been further bolstered by secular or long-term geopolitical trends, including the intensifying economic rivalry between West and East, a decline in international cooperation, escalating trade disputes, increasing political polarization, and the 'weaponization' of economic relations via sanctions. This has particularly intensified after the Russo-Ukrainian conflict and the US-driven 'trade wars.' In an era marked by more geopolitical instability, gold's status as a tangible, jurisdictionally neutral asset that can serve as collateral in various markets becomes increasingly significant. Reflecting this movement, central banks globally have been accumulating gold at a rate unseen in generations. According to the World Gold Council, after the Russo-Ukrainian conflict in 2022, central bank additional demand for gold more than doubled from 450 tons per year to more than one thousand tons per year. Surprisingly, despite the increase in official demand for gold from central banks, there is still a lot of room for a much longer process of gold accumulation or portfolio rebalancing towards the precious metal. While large advanced economies tend to hold around 25 percent of their foreign exchange (FX) reserves in gold, large EM-based central banks hold only less than 8 percent of their FX reserves in gold. Given that these EM-based central banks hold around $6 trillion in FX reserves, there is scope for a continued multi-year process of portfolio rebalancing from these reserve managers. This supports a steady long-term institutional demand for gold. Second, foreign exchange (FX) movements are poised to lend additional support to gold prices. Historically, gold has shown a strong inverse correlation with the USD – typically rising when the USD weakens and falling when it strengthens. The USD has already depreciated by more than 6.9 percent against a basket of major currencies so far this year. Moreover, despite this sharp depreciation, currency valuations still suggest that the USD remains overvalued by more than 15 percent, indicating further room for depreciation ahead. A softer USD is likely to support gold prices going forward, as it enhances global purchasing power for USD-denominated commodities like gold, stimulating demand and providing an additional tailwind for prices. Moreover, as investors seek protection against the erosion of purchasing power associated with USD depreciation, they often turn to gold as an alternative store of value. Consequently, a declining USD typically drives higher demand and upward price momentum for gold. All in all, despite sharp rally in recent months, there is still further upside for gold over the medium-term. This is supported by strong momentum across different macro regimes, long-term geopolitical trends with central bank portfolio rebalancing, and FX movements. — By QNB Economics
Forbes
22-05-2025
- Business
- Forbes
China Market Update: Bond Markets Start Intimidating Investors
CLN Asian equities were risk-off due to President Trump's budget, which, according to the WSJ, is expected to increase the deficit by $2.7 trillion over the next decade. The US 30 Treasury bond yield has risen from a September 2024 low of 3.92% to 5.14% this morning, while the Japanese Treasury bond yield has risen from 2% to 2.97% over the same period. James Carville's reincarnation quote as the bond market comes to mind: 'You can intimidate everybody.' Based on my recent travels to Europe and Asia, one shouldn't expect much sympathy or appetite for US investments from foreign investors following the recent trade 'negotiations'. Maybe the increased volatility could lead to a desire to resolve trade issues. It was very quiet except for the US-driven macro narrative, after a poor US trading day yesterday, which weighed on US-listed China stocks, as risk off is risk off. Hong Kong had a poor session as growth stocks favored by investors took the brunt of market action. XPeng +5.8% after strong results and guidance yesterday though CATL -2.25% despite the Hong Kong listing being fast-tracked for MSCI inclusion. Xiaomi was off -2.3% despite founder Jun Lei's comments on the coming July launch of their SUV model YU7 in addition to announcing their use of Qualcomm's Snapdragon 8 chips. Li Auto -2.77% lowered its 2025 production target to 640,000 from 700,000. Hong Kong banks were a safe haven though it was simply an off day despite Mainland investors buying $495 million worth of Hong Kong-listed stocks via Southbound Stock Connect. Mainland China was also weak though indices were not off as much as Hong Kong. Mainland banks also held up though the National Team's favorite ETFs had a light volumes. The Shanghai government announced expansion of its subsidy programs as the top down directive to expand from auto/EV/hybrid and home appliances to electronics gets implemented locally. The State Council hosted several agencies in a press conference on financial policies to support the science and technology sectors following yesterday's release. Again quiet so we'll keep things concise! New Content Read our latest article: New Drivers For China Healthcare: AI Med-Tech Innovation, Cancer Treatment, & Favorable Balance of Trade Please click here to read Chart1 Chart2 Chart3 Chart4 Chart5 Chart6
Bloomberg
30-04-2025
- Business
- Bloomberg
Australian House Prices Hit Record High Ahead of Saturday's Vote
Australian home prices climbed for a third straight month to a record high ahead of an election on Saturday, while defying rising uncertainty over the economic fallout from US-driven global trade turmoil. The Home Value Index advanced 0.2% in April, with every major city recording a rise, property consultancy Cotality, formerly CoreLogic Inc, said in a statement on Thursday. Darwin and Hobart were the biggest gainers, up 1.1% and 0.9% respectively, while the bellwether market of Sydney edged up 0.2%.
Trade Arabia
27-04-2025
- Business
- Trade Arabia
Investors have every reason to cheer
From fresh tariffs and fracturing alliances to recession warnings, the headlines scream turmoil. But for investors willing to tune out the noise and focus on the underlying data, there are solid reasons to stay positive, said Nigel Green, the CEO and founder of deVere Group, one of the world's largest independent financial advisory firms. According to him, the global picture is far from doom and gloom. In fact, there are three compelling reasons for investor optimism - even as Donald Trump's aggressive trade stance reshapes global dynamics. Central banks are loosening—and they're not alone A wave of monetary easing is underway. The European Central Bank cut its deposit rate to 2.25% this month - its third rate cut of the year. India followed suit in early April, lowering rates and switching to an 'accommodative' stance. Although the Federal Reserve has yet to move, markets now price in at least one rate cut before the end of the year. But it's not just central banks that are stepping up. Governments, too, are loosening the fiscal purse strings, stated Green. The EU this week approved an additional €12 billion in defence spending in direct response to Trump's demands for Nato burden-sharing - a move expected to stimulate European industry and infrastructure. Germany and France are also rolling out tax incentives for domestic manufacturing, effectively offsetting the bite of US tariffs. "This is not 2018," remarked Green. "Back then, countries were caught off guard. Now, they're responding with stimulus, strategy and speed," he stated. Global economy is more adaptive Despite all the turbulence, global growth is holding. China posted Quarter 1 GDP growth of 5.4% - above expectations and matching Q4's pace - as strong domestic demand offsets trade losses. Southeast Asia, increasingly caught in the US-China crossfire, is pivoting fast. Vietnam, Indonesia and the Philippines have ramped up public investment and are courting new trade partners, including deepening regional ties through the Asean framework. "These countries are investing in themselves," said Green. "They're not waiting to see how the US-driven trade war plays out—they're adapting now," he added. Even the US, despite recent data showing a Q1 GDP contraction of -2.5% continues to enjoy low unemployment (3.8%), solid wage growth (4.1% YoY), and resilient consumer spending. And in Europe, the European Commission's updated spring forecast projects 0.8% GDP growth this year, with expectations for stronger momentum in 2026 driven by increased defence, infrastructure, and green tech spending. "This is not a crisis. This is recalibration," noted the deVere Group CEO. The S&P 500 and Dow have both clawed back losses from earlier this month. The S&P now trades above 5,460, while the Dow recently topped 40,000 again. European equities are firming too, with the Euro Stoxx 50 up nearly 3% in April. And emerging markets, surprisingly, are holding their own: the MSCI EM index is flat on the month, buoyed by Southeast Asian resilience. Investors are repositioning, not retreating. Flows into Asia-focused ETFs and global defence funds are rising, and risk appetite is adjusting. "There's been a regime shift," said Nigel Green. "But it's one that opens up new opportunities," said Green. "We're seeing capital flow into the sectors and regions that are best positioned for the next cycle—those adapting fastest to the Trump tariffs, the global power reshuffle, and shifting trade alliances," he stated. "There's no denying that the Trump White House is reshaping the global economic order," said Green. "But investors shouldn't confuse change with collapse. Central banks are easing; governments are spending; markets are recalibrating; and countries around the world are learning fast how to thrive in the new normal," he noted.
Business Recorder
25-04-2025
- Business
- Business Recorder
Dollar falls against major pairs
NEW YORK: The dollar staged a broad retreat on Thursday, as investor gloom over the lack of progress towards defusing the US-China trade war reasserted itself following an interlude of optimism the previous day. US assets, including the dollar, rallied on Wednesday after US President Donald Trump backed down from threats to fire the head of the Federal Reserve and appeared to soften his stance on China. Treasury Secretary Scott Bessent said separately that the de facto embargo on US-China trade was unsustainable, but that the US would not move first in lowering its levies of more than 100% on Chinese goods. By Thursday, those dollar gains had unravelled. China said there had been no negotiations on the economy and trade and it urged the US to lift all unilateral tariff measures if it really wished to resolve the issue, leaving investors roughly where they were earlier in the week in terms of clarity. The yen led the charge higher, leaving the dollar down 0.71% on the day at 142.395, but still above the 140-mark breached last week. 'There were hopes of a thaw in the US-driven trade dispute with absolutely everyone,' Trade Nation strategist David Morrison said. '(Trump) softened his tone towards China, calling on them to come and negotiate. But it turns out it takes two to tango, and for now, the Chinese leadership has decided to let the Trump administration stew in its own mess,' he added. The dollar has been the biggest casualty of Trump's on-off tariffs, dropping by 4.8% in April so far alone, which would mark its largest monthly decline since November 2022. Investors had been shaken over the last few days when Trump made a series of verbal attacks on Fed Chair Jerome Powell over his reluctance to cut interest rates until justified by the data. Such has been the investor pullback from the dollar that it is on course for its worst start to the year against a basket of currencies since the 1970s, according to LSEG data. 'A nascent relief rally in markets is stalling out as hopes for a thaw in the US-China trade war unravel amid contradictory signals from officials,' said Karl Schamotta, chief market strategist at Corpay, in a research note. 'The dollar is coming under selling pressure once again, Treasury yields are inching lower and equity futures are cruising toward renewed losses at the North America open.' The Swiss franc, which is around its strongest against the dollar in more than a decade as a result of hefty safe-haven flows this month, rose, leaving the US currency down 0.58% on the day at 0.82565 francs. The pound rose 0.53% to $1.332. UK finance minister Rachel Reeves said on Thursday she was confident Britain could reach a trade deal with the United States. Bitcoin tracked the dollar lower, falling 0.84% on the day to $92,896. Meanwhile, Trump's meme coin surged 33% overnight after the online promotion of a gala dinner with the president for the top 220 buyers of the $TRUMP coin. It is still only worth roughly a quarter of what it was at its launch in January.
