Page 11 - Bullion World Volume 4 Issue 5 May 2024

Bullion World | Volume 4 | Issue 5 | May 2024

…but there is more to it than that. While the physical The period of stabilisation in the second half of the month
market for coins and bars, and price-elastic investment- was also triggered to some extent by US numbers; this
grade jewellery, has evaporated (and some coins are time the US CPI and PPI were, for the second successive
trading at a discount to spot and returning to refineries month, higher than expected and poured some cold
accordingly), the professional market has been firmly water on the bond markets’ over-benign view of the
on the bandwagon and the rise in price has become Fed’s likely future course of action. Some profit taking
self-fulfilling as not only are momentum traders and CTAs appeared but gold had grabbed the markets’ attention
involved, but as well as technical stop-driven trading, and the bull run resumed towards month-end.
there has been evidence of fresh investors.
The move was accelerated by the action in the options
In other words, the initial rise in price deterred some markets. Anecdotal evidence had already suggested
buyers and generated some profit taking, but as it that there was some high volume option trading going
gathered speed, every-one appeared to want to join the through and after a period of relatively narrow horizontal
party. ranges in January and February, premia would have
been low. The gearing on the delta of these options also
contributes to the self-fulfilling nature of the move.

Gold in key local currencies, January 2023 to date

Source: Bloomberg, StoneX

Meanwhile the Exchange Traded Products remained the quarter was -113.23t, with 68.,2t (4.1%) and 54.2t
continued to see net redemption despite the febrile (3.9%) from Europe, while Asia took in 9.6t (7.1%) and a
atmosphere elsewhere. For the whole of 2023, the minor loss of 0.4t (0.7%) from elsewhere.
World Gold Council (the most reliable source) shows a
fall of 244t (funds exodus of $14.7Bn), leaving holdings The Money Managers’ activity on COMEX largely
at yearend of 3,226t, AUM $214.4 Bn. In 2024 to end- reflected the OTC activity, with outright longs gaining
March there were fresh redemptions, although the pace 215t or 67% and shorts contracting by 46%, taking
was also slowing, with just 13.6t leaving the funds; and the net position up by factor of 1.6. At the close of
over the month overall, all of this came out of Europe, business on 2nd April, therefore, the outright long was
with a drop of 1.6% or 22t. North America bought 4.8t 538t compared with a twelve month average of 405,
(+0.3%) and Asia, 3.1t or 2.2% with 0.5t going into pointing up the possibility of sizeable lqiudiation should
other areas. This left holdings at month-end of 3,112.4t the surrounding financial and geopolitical environment
with $222.2Bn in Assets Under Management. World change, substantially – which looks unlikely.
mine production is roughly 3,650t. The net change over

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