Key takeaways

• Gold sets record high at $2,431.50 per oz
• The $850 high from 1980, would be the equivalent of $3,200 per oz in today’s money
• So far funds continue to hold on to their net long position
• Silver remains undervalued compared with gold, judging by long term Au/Ag ratios 
• PGMs follow gold, but only half-heartedly

Gold prices ramp up to fresh record highs, before pulling back to consolidate

• Gold prices sail into uncharted waters backed by strong momentum with prices rising across currencies 
• The price rise into strong headwinds suggests committed buying...
• ...buying that is not concerned about the opportunity cost
• Funds taking part in the rally, while ETF investors are scale-up selling
• Prices have run into supply above $2,400 per oz, changes in China’s market have taken some of the heat out of the market
• The US Federal Reserve’s less dovish stance also likely to see the market review its position

Silver prices briefly started to outperform gold in April, with the Gold/Silver ratio dropping to 1:82, before returning to 1:86

• The price trend appears to have turned higher and there is room for the funds to get more active

The PGMs rallied strongly off a low base, but sentiment remains marred by the uptake of EVs

• Platinum has a brighter outlook than palladium, but neither PGM is blessed with strong fundamentals at present, but production cuts should help that.

Silver remains undervalued compared with gold.

Gold sets fresh record high at $2,431.50 per oz, before pulling back to consolidate 

Spot gold prices continued to push on with their advance in April, even though they faced dual headwinds from rising bond yields and a strengthening US dollar. Prices established a fresh record high of $2,431.50 per oz on April 12, they held up in high ground for a while, before pulling back to consolidate towards month-end. Interestingly, the April high is still a long way below what the inflation-adjusted 1980 high would have been. Chart1, available to view in the full report, shows nominal and real prices for gold on an annual average price basis. The actual high in 1980 was $850 per oz – on an inflation-adjusted basis that would be the equivalent of $3,200 per oz today.

What is gold telling us?

There have been many arguments as to what has been driving gold prices higher. The fact the rally continued while bond yields and the dollar have climbed does suggest we are not in a normal market situation. The Dollar Index reached 106.50 in April, up from 100.60 at the end of 2023, and US ten-year treasury yields have climbed back to 4.6%, up from 4.2% at the start of the month and 3.8% at the end of 2023. To ignore such headwinds suggests there is an overriding desire to own gold, almost regardless of cost and opportunity cost. It is unclear why this desire has been quite so strong, but its out there.

There is an overriding desire to own gold, almost regardless of cost and opportunity cost.

While there are many reasons to be concerned about how stable our world is, including widespread geopolitical unrest, greater awareness of social inequality, sticky inflation, some sky-high equity markets, massive levels of debt, the rise of both popularist and autocratic governments and the impact of climate change, none of these issues has dramatically changed in recent months, save for the conflict in the Middle East. So, it maybe that gold has risen as much as it has because the price rise has been widespread therefore has a lot of momentum. As the table below shows, gold prices have been rising in most currencies, with gains averaging 19% so far this year in the seven currencies listed in the table below.

Gold price gains across selected currencies
per oz	01/01/2024	16/04/2024	% gain
USD	2,078	2,380	14%
EUR	1,877	2,234	19%
JPY	293,512	367,854	25%
GBP	1,632	1,921	18%
CHF	1,748	2,165	24%
INR	172,873	198,445	15%
CNY	14,775	17,229	17%
Average			19%

Read the full report

29 Apr 2024 | Categories: Gold, Silver, China, US, Platinum, Palladium

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