The latest report from the World Gold Council. The PDF version of the complete report can be downloaded here
Gold (US$/oz) returned 11.1% in the third quarter as investors responded to further central bank measures aimed at stimulating the economy. Volatility decreased during the period, with gold prices experiencing little movement in the first half of the quarter; correlations to other assets, generally low, remained similar to those seen in Q2.
Central banks announced a continuation of their unconventional monetary policy1 programmes in Q3.
Central banks have numerous rationales for undertaking unconventional monetary policy, including lowering borrowing costs and supporting financial markets.
Financial assets have responded to central bank policy announcements, but gold’s reaction has been the strongest.
There is a consensus that these policies drive investment into gold purely due to inflation-risk impact. We believe that there is not one but four principal factors that provide further support to the investment case for gold:
– Inflation risk
– Medium-term tail-risk from imbalances
– Currency debasement and uncertainty
– Low real rates and emerging market real rate differentials
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