Video Transcript
Alexandra Symeonidi
CFA, Senior Corporate Credit and Sustainability Analyst
Emerging Markets Debt Team
Gold has had an impressive rally this year, driven by several key factors, including historically high central bank purchases, strong investor inflows, and a weaker dollar—all major tailwinds for prices. Exchange-traded fund (ETF) holdings have surged, and together with central bank buying, they have been key drivers of the rally.
But in late October, we began to see some changes in momentum. We saw ETF outflows in the week of October 20, when prices dropped close to 9% from the peak, while a strengthening dollar added further pressure. These outflows accelerated into the week of October 27, keeping gold below $4,000 per ounce.
At the same time, equity markets have been strong and sentiment improved, which are typically negative signals for gold. And the gold-dollar correlation, which held firm earlier this year, began to break in September, suggesting signs of overvaluation.
Looking ahead, we believe that sustaining this rally will require continued investor and central bank demand. While we expect central bank buying to remain solid, investor flows will depend on broader market conditions and sentiment, meaning that volatility in the gold market is likely to persist.
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