After a four-year slide, the price of Gold has nowhere to go but higher and many investors are starting to agree. The case for the "safe-haven" was further assured today, as China's manufacturing data showed a contraction.
Turmoil in Chinese markets (with the view of a potential Global Sell-Off), Oil price uncertainties and a slowing US growth has tickled Investors demand for the traditional safe-haven asset. Again, their remains a high chance the FED will hold off on further interest rate rises this year adds to the attraction for the yellow metal.
There is really no sign of a re-surge in inflation and this has also been a large factor to Golds rise and this relationship goes back to the 1980's. However, what is interesting is that through the last 12 month Gold slide, we have had China, Russia and India continuing to purchase Gold (about 55% more in 2015) - but then why did not this affect the Price? It seems investors are more focused on Financial Assets & The state of the US Economy rather than Countries Gold holdings.
However, as mentioned in posts prior - it is important to note that Gold does not pay a coupon like other competing assets, although the price elasticity (over the last 5 years) seems to have drawn Investors (especially Central Banks, like China, Russia and India) towards the Bullion.
For the coming weeks, months / Central bankers like Kuroda and Draghi have key speeches scheduled (as well as NFP this week) which could further spur the rally in Gold as the consensus is for further tightening and talks of Negative interest rates and more uncertainty.
As always, Trade Smarter
Anish @Anish8Fx
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