Gold Remains Popular Inflation Hedge

by | 10. Jul 2023 - 12:57 | Spotlight on Precious Metals

According to a survey by investment firm Invesco of 85 sovereign wealth funds and 57 central banks, which together manage about $21 trillion in assets, inflation continues to be ranked as the biggest risk. Gold and emerging market bonds are seen as potential protection in this environment. A majority of central banks plan to buy more gold over the next three years, according to the report, Bloomberg wrote Monday. Currently, however, the gold price is stagnant, and investors are eagerly waiting for the U.S. inflation data.

Palladium (Pd) is currently trading cheaper than it has since late 2018. The price peak in March 2022 after the start of the Ukraine war was over $3100/oz or EUR100/g. Since then, it has only been downhill. Currently, the interbank spot price is hovering around $1250/oz. A drop of over 60% compared to the high at that time. But this also offers its opportunities, albeit only short or medium-term and equally speculative. Pd has now reached a record net short position. The probability of a technical countermovement thus increases, and if so-called short covering should start, it could quickly go up within a very short time.

In general, the first signs of summer calm are emerging in the precious metals. Many market participants and investors are not active, it is correspondingly quiet in the field of foreign exchange, interest rates, and equities.

“PGM – Spotlight on Precious Metals” is a commodity column focused on gold and precious metals but mainly dedicated to the widely discussed yet rarely analyzed platinum group metals (PGM). Focused on the industrial applications of the metals as well as their potential as tangible assets, the abbreviation PGM has a twofold significance: With Philipp Götzl-Mamba we could win an experienced precious metal trader, operating at the cutting edge of the industry, sharing his knowledge with us. Financial expert Jens Weidenbach regularly compliments the column with an overview of the currency and capital markets, which have an influence on commodity prices that should not be underestimated.

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