It’s been a stellar year for gold so far, and the way things are shaping up 2019 is but a precursor to the major event ahead. In any terms, whether the US dollar, the pound Sterling, or the Chinese Renminbi, gold has significantly risen. There has been a change in sentiment towards gold, driven by fundamentals in the market that are not going away easily or soon. As a result, you are seeing gold do what it is supposed to do in situations that we are seeing unfold around the world. The real tilt in gold’s story is that there has been a shift in its narrative. For years it has been ignored by the investment community, as many were put off by its non-yield paying tendencies, but now we have an explosion in negative yielding debt. With negative yields set to be here for some time, we believe the story of gold has moved into a positive regime. As well as that inflation in the US looks as though it is starting to get a grip, as the chart shows.
Along with a significant shift in the backdrop surrounding gold, we are now in a good seasonal spot. Seasonality plays a major role the gold market, which is now entering a positive period. Demand for gold should ramp up with Diwali (in India) kicking off the festive period in November. During this period, gold is given as a gift and therefore there tends to be a significant jump in demand. Following on from Diwali, we will quickly move into Christmas and then the Chinese New Year. As India and China continue to expand and wealth grows within both countries, demand for gold is set to become more pronounced, especially given that people within these nations will be aware of how depressed the long-term price of gold really is. With a natural increase in demand for gold, prices will be pushed higher over the coming months.