Investment commentary: Q4 and full year 2012
Overview
This commentary summarises gold's price performance and relevant statistics in various currencies and the macroeconomic factors that influenced gold's behaviour during the fourth quarter and 2012 as a whole. It complements the investment statistics analysis updated on a regular basis. It also discusses likely future developments ahead that will underpin the fundamental drivers of gold in 2013, as well as others that may provide challenges.
This commentary summarises gold's price performance and relevant statistics in various currencies and the macroeconomic factors that influenced gold's behaviour during the fourth quarter and 2012 as a whole. It complements the investment statistics analysis updated on a regular basis. It also discusses likely future developments ahead that will underpin the fundamental drivers of gold in 2013, as well as others that may provide challenges.
Q4 and full year 2012 in summary
- 2012 marked the 12th consecutive year of annual gains. Despite a weak fourth quarter, gold in US dollars ended 2012 up 8.3% at US $1,657.50 /oz on the London PM fix, marking the 12th year of annual gains.
- Low volatility despite continued uncertainty. The fall in gold prices in the last quarter came amidst low volatility. Gold in US dollars had an annualised volatility of 11.5%, well below its long-term average of 16% and the third lowest quarterly volatility in the past 10 years, in line with a drop in volatility seen in many other assets classes.
- Correlations drop on lack of activity and lower systemic risk. Correlations fell during Q4 2012 as a dearth of macroeconomic events during the quarter left gold's other fundamental drivers and speculative positioning in charge. Gold's correlation to the trade-weighted US dollar, global bonds and equities were all lower than in Q3 2012 and Q4 2011.
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