For all its complexities, at bottom what it likes is a weak dollar, turmoil, and lower interest rates.Turmoil makes investors head for safe-haven assets, of which gold is by far the most long-standing.That makes the activity of money managers of late rather mystifying.
In just 37 weeks out of 841 has the group been counting on gold weakness – but that’s what’s been happening in recent weeks. Like money managers, they’re making macro bets on gold rather than in the physical metal business or trading the spreads between bid and ask prices. That doesn’t quite explain it, though. While “other reportables” remain long, they too have wound back their net positions close to their least bullish levels since early 2020.
Jewellery typically accounts for about half of gold demand, and while prices at the moment aren’t especially cheap, with trillions of post-Covid savings sitting on the sidelines and inflation approaching double figures, they’re looking better value every day. Shares in Chow Tai Fook Jewellery Group Ltd, a Hong Kong jeweller with thousands of outlets in mainland China and a decent proxy for spending on trinkets in that country, are currently closing in on their highest levels since November.