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  Structural uptrends may offer attractive entry points in 2025   Over the past two years, a breakdown in the relationship between gold and real interest rates has been on display. “We have in the past attributed the phenomenon largely to emerging market central bank buying and geopolitical risk premia. But perhaps bond uncertainty has also played a role, said World Gold Council (WGC) in their Gold Market Commentary for the month of December 2024.   Data suggests that when interest rate uncertainty – as measures by the MOVE index - is high, yield trajectory appears to exert less of a drag on gold returns than when it is low. It also looks like this is a statistically significant difference, if we regress gold returns on a real yield component with an interaction dummy for when the MOVE index is above 100 (it has recently risen to 99).  The normal sensitivity is more than halved when bond uncertainty is high, even accounting for moves in the US dollar index. ...

Gold in more than a decade up 28% through November   Gold is poised for its best annual performance in more than a decade up 28% through November. Behind this, central bank and investor buying have more than offset a notable deceleration in consumer demand.   Asian investors have been a near constant presence, while lower yields and a weakening US dollar in Q3 fuelled Western investment flows. However, it is gold’s role as a hedge amidst rising market volatility and geopolitical risk that most likely explains its remarkable performance. As we look forward, all eyes are focused on what Trump’s second term may mean for the global economy. Thrill-seeking investors may benefit from an early wave of risk-on flows, but potential trade wars and inflationary forces may spill over into an expected subpar economic growth.    The market consensus of key macro variables such as GDP, yields and inflation – if taken at face value – suggests a positive but much more modest ...