Gold Recovers After Suffering Major Hit Amid Interest Rate Concerns
Gold recently managed to claw its way back into the positive, following a morning slump. This comes after the precious metal experienced its harshest quarter in 13 years, ending in June.
The commencement of the second half witnessed gold on the losing end, however, it managed to bounce back during the early afternoon trade. Latest figures show gold futures just above breaking even at $4041.30, with spot prices showing a slight increase of 0.49% at $4,025.89.
Gold's Rocky Journey
Gold's journey has been tumultuous. After reaching an unprecedented peak of $5,586.20 on January 29, the precious metal has seen a significant dip. Investors have been wary of the non-yielding asset's future amid a likely rise in interest rates.
Gold suffered a massive reduction of about 16% in the last three months ending on June 30, marking its lowest quarter since 2013. The year-to-date figures also show a decline of 7.76%.
What's Impacting Gold's Performance?
One expert, Giovanni Staunovo, a commodity analyst, suggests that gold's classic appeal as a safe investment has been undermined recently by factors such as robust U.S. economic data, higher real yields, a stronger dollar, and less lenient market view on the Federal Reserve's rate path.
Staunovo explained that the changes in gold's prices reflect the spike-and-consolidation pattern typically seen during geopolitical crises. He noted that the current economic conditions make gold more responsive to macro drivers.
Gold's Role in Investment Portfolios
Despite the shaky performance, gold remains a crucial part of investment portfolios. The Amundi Investment Institute suggests that as traditional financial correlations disintegrate, gold's role becomes more important.
In its mid-year Global Investment Outlook, the Institute pointed out that the complex monetary policy environment, coupled with high public debt and a shift by central banks away from dollar-based assets, should bolster demand for gold and other precious metals in the second half.
Monica Defend, head of Amundi Investment Institute, said, "The best portfolios for this new regime can withstand different scenarios: they need to be diversified across currencies, invested in real assets and gold, and explore equity sectors and structural themes with discipline."
Central Banks and Gold
Recent findings from the World Gold Council's annual Central Bank Gold Reserves survey suggest that more global central banks are likely to boost their gold reserves in the coming year.
Staunovo commented on this by saying, "We think central bank gold demand, continued diversification away from the US dollar, and global debt concerns will remain important structural supports. While the near-term backdrop looks skewed toward consolidation, positioning does not appear stretched, and we remain constructive over the next 12 months."
Gold recently managed to claw its way back into the positive, following a morning slump. This comes after the precious metal experienced its harshest quarter in 13 years, ending in June.
The commencement of the second half witnessed gold on the losing end, however, it managed to bounce back during the early afternoon trade. Latest figures show gold futures just above breaking even at $4041.30, with spot prices showing a slight increase of 0.49% at $4,025.89.
Gold's Rocky Journey
Gold's journey has been tumultuous. After reaching an unprecedented peak of $5,586.20 on January 29, the precious metal has seen a significant dip. Investors have been wary of the non-yielding asset's future amid a likely rise in interest rates.
Gold suffered a massive reduction of about 16% in the last three months ending on June 30, marking its lowest quarter since 2013. The year-to-date figures also show a decline of 7.76%.
What's Impacting Gold's Performance?
One expert, Giovanni Staunovo, a commodity analyst, suggests that gold's classic appeal as a safe investment has been undermined recently by factors such as robust U.S. economic data, higher real yields, a stronger dollar, and less lenient market view on the Federal Reserve's rate path.
Staunovo explained that the changes in gold's prices reflect the spike-and-consolidation pattern typically seen during geopolitical crises. He noted that the current economic conditions make gold more responsive to macro drivers.
Gold's Role in Investment Portfolios
Despite the shaky performance, gold remains a crucial part of investment portfolios. The Amundi Investment Institute suggests that as traditional financial correlations disintegrate, gold's role becomes more important.
In its mid-year Global Investment Outlook, the Institute pointed out that the complex monetary policy environment, coupled with high public debt and a shift by central banks away from dollar-based assets, should bolster demand for gold and other precious metals in the second half.
Monica Defend, head of Amundi Investment Institute, said, "The best portfolios for this new regime can withstand different scenarios: they need to be diversified across currencies, invested in real assets and gold, and explore equity sectors and structural themes with discipline."
Central Banks and Gold
Recent findings from the World Gold Council's annual Central Bank Gold Reserves survey suggest that more global central banks are likely to boost their gold reserves in the coming year.
Staunovo commented on this by saying, "We think central bank gold demand, continued diversification away from the US dollar, and global debt concerns will remain important structural supports. While the near-term backdrop looks skewed toward consolidation, positioning does not appear stretched, and we remain constructive over the next 12 months."