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| Based on the LBMA reference price, gold increased 2% in November, gaining early in the month before giving up most of its gains in the following weeks. Gold’s performance was influenced by weaker equities and commodities, lower rates, and the strength of the US dollar. Gold found support at its 50- and 200-day moving averages near the end of the month at $1,780/oz. In the closing days of November, fears over the new Omicron COVID variant provided some further safe-haven support for gold, but it wasn’t enough to drive gold beyond US$1,800/oz. |
| Several important moves highlighted the trend of the gold price in November: Gold rose from an intra-month low of US$1,763/oz on November 3 after the US Federal Reserve revealed its intention to taper its bond-buying program while delaying rate rises. The surge in gold was accelerated when the BoE surprised markets by keeping interest rates unchanged. A few days later, the October US CPI reading of 6.2% y-o-y — the highest level since 1990 – fuelled fears that inflation might be more persistent than initially expected. This increased the gold price by $30/oz, bringing it close to $1,860/oz. Gold’s escape from a 15-month downtrend proved short-lived, as positive US retail sales prompted the US dollar to gain more, generating headwinds for gold. This was compounded by rising yields in the aftermath of Fed Chair Powell’s re-election. Many of the factors that have drove gold this year, including as the pace and direction of inflation and rates, COVID, and the resilience of global economic growth, we believe will continue to be relevant in 2022. Uncertainty will almost certainly continue to encourage gold investing as a hedge. Likewise, the strength of consumer demand recovery will be determined by the strength of economic recovery in key markets, as well as the direction and volatility of the gold price. Finally, because gold is a crucial component of central bank reserves, we predict continuing support from central banks. |