GOLD AND THE FEDERAL RESERVE’S “AVERAGE INFLATION TARGETING”


One of the historic drivers of the price of gold has been the fear of inflation. So, with the lack of any serious inflation threat on the near-term horizon, why has gold put in such a stellar performance?


 that have taken December gold futures to the record    against uncertainty and adversity in light of the global    U.S. dollar weakness and the cloudy global economic  they are now?


     


  bank gold purchases since the suspension of dollar   crisis, central banks were net sellers of gold worldwide  more gold, although the rate of purchases slowed somewhat recently as central bankers focused on   


So, what do central banks know and why have they   Whatever their reasoning is to acquire gold there is   what the strong hands are doing in any market, and currently that would include gold.


Chart 1: Gold outperformed all major assets in H1, Y-t-d perfromance of global assets*


BEFORE THE 2007-2009 FINANCIAL CRISIS, CENTRAL BANKS WERE NET SELLERS OF GOLD WORLDWIDE FOR DECADES.


Source: Bloomberg, ICE Benchmark Administration, World Gold Council; Disclaimer *As of 30 June 2020. Returns based on the LBMA Gold Price PM, Nasdaq Composite, Bloomberg Barclays US Treasury Index and Global Treasury Index ex US, ICE BAML US 3-month T-bill Index, Bloomberg Barclays US Corporate and High Yield Indices, MSCI EM Index, Bloomberg Commodity TR Index, MSCI EAFE Index, S&P 500 Indices, and Bloomberg Oil TR Index.


10 | ADMISI - The Ghost In The Machine | Q3 Edition


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