GJ Town India

  Central bank buying, ETF inflows, geopolitical risks fuel    In the Weekly [15-19 September] review Dr. Renisha Chainani, Head- Research, Augmont said, gold prices rebound to $3730(~Rs 110,600) again and silver touches new high of $43.94(~Rs 132,000), bolstered by strong central bank purchases, consistent ETF inflows, and safe-haven demand amid ongoing geopolitical tensions and worries about the economic effects of President Donald Trump's tariffs.    For the first time since December, the Federal Reserve cut its benchmark rate by 25 basis points, as was generally expected, placing the overnight funds rate between 4.00% and 4.25%. In addition, concerns over a weakening US labor market prompted the US central bank to consider two additional rate cuts this year. As a result, on Wednesday, the non-yielding gold price surged above $3700 to reach a new all-time high.    Fed Chair Jerome Powell stated that risks to inflation are biased to the...

  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. ...