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Spot gold prices have surged to a new record high of $2,448 per ounce recently, driven by heightened global demand amidst economic and geopolitical uncertainties. This surge was further fuelled by expectations of central bank interest rate cuts, which enhance gold’s attractiveness.
China has been the largest gold buyer
According to the World Gold Council the People’s Bank of China (PBOC) has been consistently acquiring gold for 17 consecutive months, resulting in a 16% increase in its gold holdings. This strategic move aligns with the global trend among central banks to diversify their reserves and hedge against global economic uncertainties.
In 2023 alone, China’s central bank acquired 225 tons of gold, bringing its total gold reserves to 2,262 tons, while India’s central bank purchased 16.2 tons. Consequently, China has surpassed India as the world’s largest gold buyer for the year.
Central banks demand
Gold holds significant place in central bank reserves due to its safety, liquidity, and return. Therefore, central banks are substantial holders of gold, holding roughly one-fifth of the total gold mined. Notably, the central banks of Poland and Singapore have been increasing substantially their gold reserves in 2023, ranking as the second and third largest buyers for the year. Central banks maintained the pace of the record 2022 purchases and have bought 1,037 tonnes in 2023.
Gold shines despite headwinds
Recent geo-political tensions in the Middle East have bolstered gold prices to fresh record highs on save haven demand; however, the subsequent cooling of the tensions led to a sharp decline in gold prices. After a strong surge since mid-February the price of gold declined more than 4% this week.
Apart from the conflict in the Middle East, traders would be closely monitoring the U.S. economic data this week. The Federal Reserve preferred measure of inflation – the personal consumption expenditures (PCE) price index would be released on Friday which is expected to show a rise in March. Such scenario would potentially influence the Federal Reserve to delay interest rate cuts as inflation has been rising this year, which in turn could adversely impact gold prices.
It should be noted that despite the recent surge in U.S. Treasuries and the U.S. dollar, which is typically a headwind for gold, gold prices have been surging higher on central banks buying, particularly China and geo-political instability. This shows that the aggressive central banks buying is providing crucial support for gold prices, which are likely to remain elevated in 2024.
Source: TradingView
Gold outlook and price forecast
Gold has rallied strongly over the past two months, despite surging U.S. dollar, rising inflation and signals for “higher for longer” rates from the Federal Reserve. These developments are generally bearish for gold, but the precious metal surged regardless.
Apart from central banks buying, the industrial usage in electronics is unlikely to diminish any time soon and could keep demand for physical gold in the years to come.
Once inflation start to steadily decline to the 2% target the Federal Reserve is likely to start to cut interest rates towards the end of the year. This is a big tailwind for the yellow metal and some of the strongest rallies have occurred during monetary easing cycles.
While gold is retreating from its record high and some consolidation could be seen in the coming months, higher price levels are likely in 2024 and 2025. Our year end target for gold is in the range of $2,500 and $2,550.
Professional traders looking for magnified exposure to gold may consider Leverage Shares +3x Long Gold or -3x Short Gold ETPs.
Footnotes:Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.
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The ETP securities are intended for sophisticated investors who (i) are able to monitor their investment in the ETP securities on a frequent basis in line with the recommended holding period; (ii) understand the risk of compounded returns and the increased risk of investment in leveraged products; (iii) can afford to risk losing their investment; and (iv) and have a very short investment horizon in line with the recommended holding period. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer. This material is not intended to be relied upon as a forecast, research or investment advice and is not a recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy. Any decision to invest should be based on the information contained in the relevant base prospectus after seeking independent investment, tax and legal advice.
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The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
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Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
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Terms and Conditions
Notice
If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
Risk Warnings
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Exclusion of Liability
Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Investment
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
Cookies
Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.
This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
By clicking you agree to the Terms and Conditions displayed.
