Gold seems to lacklustre, what now for Gold?

We have seen ETF outflows and falling open interests in Gold futures thus far, seems like the “summer doldrums” as many coined this term for Gold is back after being absent for the last 2 years.

Interestingly, World Gold Council has released Central bank Gold data and Central banks were net buyers of Gold up to July. These price levels seem to be attractive to Central banks and if this will continue to later parts of this year is yet to be seen.

WGC has reported that Gold is doing well in many currencies except in USD, CAD and we know for SGD (Table 1)too thus far. Based on their report, Gold is seems to be a good asset class to hold during recessions together with corporate and treasury bonds (Chart 1). However, at this moment, we are not in a recession and even if US enters into a recession, will Gold continue to shine during this period? It is important to be diversified to tide through difficult periods and seize opportunities when it presents itself. Holding precious metals in a portfolio is important and seems to make sense based on the data presented, however, the rule of thumb is always not to put all your eggs in one basket.

Chart 1:

Brian