US dollar strength

Traders push back RBA rate hike bets until November WTI and Brent crude implied volatility falls to lowest since 2020 Turkey unloads significant portion of gold holdings The Australian dollar tumbled after the RBA kept rates on hold again and signaled they might be done tightening.  Given most economists expected a hike, aussie-dollar was ripe for a plunge.  US dollar strength also supported the decline after the Treasury increased their net borrowing estimate.     Oil The oil price rally is ready for a break as US stocks soften and the dollar firms up.  August is off to a slow start for energy traders as the outlook on demand could face rising prices.  The oil market will likely remain tight even if the oil giants, like BP start delivering large price increases.  Oil remains one of the most attractive trades and buyers will likely emerge on every dip.   Gold Gold prices are not seeing safe-haven flows as US equities tumble, because the US dollar is catching a bid as yields rise higher.  Gold is going to need to see Treasury yields come down, but that might not happen until the market fully prices all the longer-dated issuance that is coming from the Treasury.  Gold’s moment in the sun is coming, but first markets need to see the bond market selloff end. If bearish momentum remains in place, gold could find major support at the $1940 level. Until we get beyond Apple earnings and the NFP report, positioning might be limited.  

The resilience of the eurozone's economy breeds complacency. This is an extremely dangerous feeling given the ongoing monetary policy tightening by the European Central Bank, which is in effect with a time lag. According to Bloomberg's research, a 425 bps increase in the interest rate since the beginning of the cycle will harm the currency bloc's GDP by 3.8%. Taking into account the negative impact of the energy crisis and the withdrawal of fiscal stimulus measures, this figure will rise to 5%. It's no wonder that members of the Governing Council are starting to doubt whether monetary tightening should be continued in September, and EUR/USD is falling.     In reality, most investors, according to ING's opinion, still believe that the euro will rise against the US dollar by the end of the year. Bloomberg's expert consensus on the main currency pair stands at 1.12. Moreover, the corrections of 5% in February, 4% in May, and 3% in July-August in EUR/USD indicate the strength of the uptrend. It is becoming more challenging for the bears to push the quotes lower. However, expectations are one thing, and reality is another.   Strengthening the euro requires an improvement in the health of the global economy. Then procyclical currencies will become the favorites. Unfortunately, this is not happening at the moment. Meanwhile, the strength of the US labor market makes the Federal Reserve keep its finger on the pulse. FOMC official Michelle Bowman believes that the central bank will need to raise the federal funds rate from 5.5% to 5.75%. The US dollar is supported by a favorable external backdrop, such as rising bond yields due to massive Treasury issuances, credit rating downgrades by Fitch, and the start of the normalization of the Bank of Japan's monetary policy.   At the same time, there is a pullback in stock markets that have been surging for five consecutive months. The worsening global risk appetite is a powerful driver of EUR/USD's decline. In this scenario, investors' demand for the dollar as a safe-haven asset increases. The bears have one more trump card up their sleeve.   Despite the stability of the US economy, the business cycle has not been canceled. 67% of investors-respondents of MLIV PULSE believe that by the end of 2024 a recession will hit the US. Moreover, 20% of those polled predict a recession already in the current year. It's as if they don't believe the Fed, which no longer considers a downturn scenario in 2023.       Thus, the euro is currently not living up to expectations, and the weakness of the eurozone's economy could lead to a premature end to the cycle of monetary tightening by the ECB. On the contrary, the US dollar is in demand among investors due to the strength of the US economy, its safe-haven status, and the rally in Treasury bond yields.   Technically, on the daily chart of EUR/USD, the Three Indians pattern continues to unfold. We successfully utilized the retracement by shorting on the bounce from the resistance at 1.1035. We are holding the position and raising it on a breakthrough below the support level at 1.0965    

Resilient US retail sales fuel inflation expectations, Fed hawks  By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   The Americans continue spending and that's bad news for the entire world. Announced yesterday the July retail sales data came in better-than-expected in the US. Sales grew 0.7% on a monthly basis and more than 3% on a yearly basis - the biggest figure since January, when sales soared by 3% as well. Amazon's Prime day apparently helped boost online sales, while demand for bigger items including furniture and auto parts declined. But all in all, the American consumer spent 3% more compared to a year ago, Home Depot reported small earnings beat yesterday and its CEO confirmed that 'fears of a recession have largely subsided, and the consumer is generally healthy... while adding that 'uncertainties remain'. Uncertainties remain, yes, but the resilience of the US consumer spending sapped investor sentiment by fueling inflation expectations and Federal Reserve (Fed) hawks, yet again. The US 2-year yield spiked above the 5% mark, but bounced lower, certainly helped by a big drop in Empire State manufacturing in August, the 10-year yield flirted with 4.30%, while major stock indices fell. The S&P500 closed below the 50-DMA, which stands at 4446, Nasdaq 100 remained offered below its own 50-DMA, at 15175, while Russell 200 slipped below the 50-DMA.  In the FX, the strength of the US consumer spending is reflected as a stronger US dollar across the board. The US dollar index remains bid, while Cable bulls resist to the bears around the 1.27, and above the 200-DMA, which stands near 1.2620, as the data released yesterday showed that wages in Britain accelerated at a record pace. Happily, this morning's inflation data poured some cold water on the fire, as the CPI fell from 7.9% to 6.8% in July, as expected, yet core inflation remained steady at 6.9%, while the core PPI came in higher than expected. On the food front, grocery prices also fell more than 2 percentage points to 12.7%. But 12.7% is still a very high number. As a result, odds for a 50bp hike at the Bank of England's (BoE) September meeting is given a 1 over 3 chance, the 2-year gilt yield is back above 5%, and looks like it's there to stay, as the peak BoE rate is seen at 6%.       Across the Channel, the 10-year bund yield is also pushing higher near a decade high, and all eyes are on the European GDP and industrial production data this morning. The European economy is weakening due to the rising rates, tightening credit conditions and high energy prices, but the fact that the labour market remains tight in Europe as well remains a major concern for inflation expectations for the European Central Bank (ECB), which will let the economy sink further if it doesn't take further control over inflation. Therefore, the EURUSD will certainly react negatively to a weak European data set today, and the pair could re-test the minor 23.6% Fibonacci retracement level, at 1.0870, but figures more or less in line with expectations should not change the ECB's hawkish tilt. The problem is, there is nothing the ECB could do - other than restricting financial conditions - regarding the energy and gas prices – which move parallel to completely external factors like the Ukrainian war and labour strikes in Australia.   In this sense, the Dutch TTF futures were again up by 12% yesterday, while US crude tanked near the $80pb level, pressured lower by 1. the surprise Chinese rate cut's inability to spark interest in risk assets, 2. news that China's imports of sanctioned Iranian hit a record high of 1.5mbpd this month - that oil trading at around $10 discount to Brent and 3. the latest data from the API hinting at an almost 7mio barrel decline in US crude inventories last week. The more official EIA data is due today, and the consensus is a 2.4 mio barrel fall. US crude could well slip below the $80pb on slow growth concerns, but Saudis will fight to keep the price above $80pb in the medium run.     Back to the inflation talk, the recent rise in energy and food prices is concerning for the euro area's inflation in the next readings. Therefore, the falling inflation trend remains in jeopardy, as the discussion of an ECB pause on rate increases.     The Reserve Bank of New Zealand (RBNZ) held its cash rate unchanged for the 2nd consecutive month but warned that there is a risk that activity and inflation measures do not slow as much as expected, and that they won't be cutting rates until the Q1 of 2025. The kiwi extended losses against the greenback, but the selloff remained contained.      Due today, the FOMC minutes will likely show that the Fed officials remain cautious despite the latest fall in inflation numbers, for the same reasons: rising energy and food prices that are sometimes driven by geopolitical events and that the Fed could only watch and adopt. The Fed is expected to hold fire on its rates in the September meeting, but nothing is less guaranteed than the end of the tightening cycle before the year end.      

05:40BST Thursday 17th August 2023 Hawkish Fed minutes sends US markets to one-month lows  By Michael Hewson (Chief Market Analyst at CMC Markets UK)     While European markets have struggled for direction this week with a slight downward bias, the FTSE100 is on course for its worst weekly decline in over a month.  US markets came under further pressure in the wake of the release of the latest Fed minutes sliding to one-month lows with the Nasdaq 100 leading the move lower, as both the S&P500 and Nasdaq fell further below their 50-day SMA's. The post minutes slide, and the prospect that rates could stay higher for longer looks set to translate into another weak open for Europe, with Asia markets also feeling the pressure over concerns about the prospects for the Chinese economy. The minutes came across as reasonably hawkish, not altogether surprising given recent commentary from various Fed officials, however there was some surprise that only two members appeared to support keeping rates unchanged.     There was a broader consensus or concern that most participants continued to see significant upside risks to inflation, despite headline inflation having fallen to 3%, and that further rate rises might be needed. Despite recent hawkish rhetoric from various Fed officials' markets had got comfortable with the idea that the July rate hike was probably going to the last one. Last night's minutes called that assumption into question even as various Fed officials mulled that the risks around monetary policy was becoming two-sided, with some unease about how much further the central bank can go when it comes to further rate rises.     With an expectation that more rate hikes might be coming, US 10-year yields pushed to their highest levels since last October, while the US dollar pushed up to its highest levels in 6 weeks. Last night's minutes also serve to shift the market focus on to Jackson Hole next week and whether Fed chair Jay Powell will give any sort of steer on which way the Fed might lean next month. It wasn't just US yields that pushed higher yesterday, UK yields also pushed back to their highs of the month, after core CPI for July came in unchanged at 6.9%. It's set to be a quiet day data wise with the latest set of weekly jobless claims set to see a modest fall to 240k from last week's big jump to 248k. Continuing claims, on the other hand fell back towards their lowest levels this year at 1,684k, and could see a move back above 1,700k.     EUR/USD – slipping towards the main support area at the 1.0830 area. Still feels range bound with resistance at the 1.1030 area.     GBP/USD – remains well supported above the recent lows at the 1.2600 area. A break below 1.2600 targets 1.2400. Until then the bias is for a move back above the 1.2800 area through 1.2830 to target 1.3000.         EUR/GBP – slipping further way from the 100-day SMA towards the 0.8530 area. Above the 100-day SMA targets the 0.8720 area.     USD/JPY – continues to edge higher, with support now at the 144.80 area. The move above the previous peaks at 145.10, opens the prospect of further gains towards 147.50.     FTSE100 is expected to open 37 points lower at 7,320     DAX is expected to open 95 points lower at 15,694     CAC40 is expected to open 40 points lower at 7,220

Remember that 'back to school' feeling at the end of summer? A tedious car journey home after holiday fun, knowing you'll be picking up where you left off? I'm afraid we've got a very similar feeling about the global economy right now. 'Are we nearly there yet?'. No. Very few reasons to be cheerful Lana del Rey's Summertime Sadness classic comes to mind as we gear up for autumn. And I'm not just talking about chaotic weather or even, in my case, disappointing macro data. Most of us have had the chance to recharge and rethink over the past couple of months. and I'm afraid all that R&R has done little to brighten our mood as to where the world's economy is right now. Sure, the US economy has been holding up better than we thought. And yes, the eurozone economy grew again in the second quarter. Gradually retreating headline inflation should at least lower the burden on disposable incomes. And let's be thankful for the build-up of national gas reserves in Europe, which should allow us to avoid an energy supply crisis this winter unless things turn truly arctic. But that's about as upbeat as I can get. We still predict very subdued growth to recessions in many economies for the second half of the year and the start of 2024. The stuttering of the Chinese economy seems to be more than only a temporary blip; it seems to be transitioning towards a weaker growth path as the real estate sector, high debt and the ‘de-risking’ strategy of the EU and the US all continue to weigh on the country's growth outlook. In the US, the big question is whether the economy is resilient enough to absorb yet another potential risk factor. After spring's banking turmoil, the debt ceiling excitement, and more generally, the impact of higher Fed rates, the next big thing is the resumption of student loan repayments, starting in September. Together with the delayed impact of all the other drag factors, these repayments should finally push the US economy into recession at the start of next year. And then there's Europe. Despite the weather turmoil, the summer holiday season seems to have been the last hurrah for services and domestic demand in the eurozone. Judging from the latest disappointing confidence indicators, the bloc's economy looks set to fall back into anaemic growth once again   Little late summer warmth This downbeat growth story does have an upbeat consequence; inflationary pressure should ease further. It's probably not going to be enough to bring inflation rates back to central banks’ targets, but they should be low enough to see the peak in policy rate hikes. Central bankers would be crazy to call an end to those hikes officially; they don't want to add to speculation about when the first cuts might come, thereby pushing the yield further into inversion. And there's also the credibility issue - you never know, prices might start to accelerate again. So, expect major central bankers to remain hawkish at least until the end of the year. In our base case, we have no further rate hikes from the US Federal Reserve and one final rate rise by the European Central Bank.   However, in both cases, these are very close calls, and the next central bank meetings are truly data-dependent. Sometimes, a Golden Fall or Indian Summer can make up for any summertime sadness. But it doesn’t look as if the global economy will be basking in any sort of warmth in the coming weeks. The bells are indeed ringing loud and clear. Vacation's over; school is here. And while I'm certainly too old for such lessons, I'm taken back to that gloomy, somewhat anxious feeling I had as a kid as summer wanes and the hard work must begin once again.   Our key calls this month: • United States: The US confounded 2023 recession expectations, but with loan delinquencies on the rise, savings being exhausted, credit access curtailed and student loan repayments restarting, financial stress will increase. We continue to forecast the Federal Reserve will not carry through with the final threatened interest rate rise. • Eurozone: The third quarter may still be saved by tourism in the eurozone, but the latest data points to a more pronounced slowdown in the coming months. Inflation is falling, but a last interest rate hike in September is not yet off the table. The European Central Bank will be hesitant to loosen significantly in 2024. • China: The latest activity data has worsened across nearly every component. Markets have given up looking for fiscal stimulus, and have started making comparisons with 1990s Japan. We don’t agree with the Japanification hypothesis, but clearly a substantial adjustment is underway, and we have trimmed our growth forecasts accordingly. • United Kingdom: Uncomfortably high inflation and wage growth should seal the deal on a September rate hike from the Bank of England. But emerging economic weakness suggests the top of the tightening cycle is near, and our base case is a pause in November. • Central and Eastern Europe (CEE): Economic activity in the first half of the year has been disappointing, leading us to expect a gloomier full-year outlook. Despite this, we see a divergence in economic policy responses, driven by countryspecific challenges. • Commodities: Oil prices have strengthened over the summer as fundamentals tighten, whilst natural gas prices have been volatile, with potential strike action in Australia leading to LNG supply uncertainty. Chinese concerns are weighing on metals, but grain markets appear more relaxed despite the collapse of the Black Sea deal. • Market rates: The path of least resistance is for longer tenor rates to remain under upward pressure in the US and the eurozone and for curves to remain under disinversion (steepening) pressure. We remain bearish on bonds and anticipate further upward pressure on market rates from a tactical view. • FX: Stubborn resilience in US activity data and risk-off waves from China have translated into a strengthening of the dollar over the summer. We still think this won’t last much longer and see Fed cuts from early 2024 paving the way for EUR:USD real rate convergence. Admittedly, downside risks to our EUR/USD bullish view have grown.     Inflation has only been falling for a matter of months across major economies, but the debate surrounding a possible “second wave” is well underway. Social media is littered with charts like the ones below, overlaying the recent inflation wave against the experience of the 1970s. These charts are largely nonsense; the past is not a perfect gauge for the future, especially given the second 1970s wave can be traced back to another huge oil crisis. But central bankers have made no secret that nightmares of that period are shaping today's policy decisions. Policymakers are telling us they plan to keep rates at these elevated levels for quite some time.

The previous trading week was filled with important events and reports. When looking at the range and movements of both instruments, one might wonder: why was it so subdued? It was reasonable to expect stronger movements and market reactions. To briefly recap, key reports from the United States turned out weaker than market expectations. Even the stronger ones left a peculiar impression. GDP grew by 2.1% in the second quarter, not the expected 2.4%. The ADP report showed fewer new jobs than expected. Nonfarm Payrolls reported more jobs, but the previous month's figure was revised downward. The ISM Manufacturing Index increased but remained below the 50.0 mark. The unemployment rate rose to 3.8%, which few had anticipated.     Based on all these reports, one might have assumed that it was time to build a corrective upward wave, but on Thursday and Friday, the market raised demand for the US dollar, so both instruments ended the week near their recent lows. So what can we expect this week?   On Monday, the most interesting event will be European Central Bank President Christine Lagarde's speech. On Tuesday, another speech by Lagarde, as well as Services PMIs of the European Union, Germany, and the United Kingdom. We can also expect speeches by other members of the ECB Governing Council. I advise you to monitor the information related to Lagarde's speeches. If she softens her stance, it can have a negative impact on the euro's positions. Wednesday will begin with a report on retail trade in the EU and end with the US ISM Services PMI. We can consider the ISM report as the main item of the week, although the ISM Manufacturing PMI that was released on Friday did not stir much market reaction. It is likely that the index will remain above the 52.7 mark, which is unlikely to trigger a market reaction. On Thursday, you should pay attention to the final estimate of GDP in the second quarter for the European Union. If it comes in below 0.3% quarter-on-quarter, the market may reduce demand for the euro. The US will release its weekly report on initial jobless claims. On Friday, Germany will publish its inflation report for August, and that's about it. There are hardly any important events and reports this week. Based on the conducted analysis, I came to the conclusion that the upward wave pattern is complete. I still believe that targets in the 1.0500-1.0600 range are feasible, and I recommend selling the instrument with these targets in mind. I will continue to sell the instrument with targets located near the levels of 1.0637 and 1.0483. A successful attempt to break through the 1.0788 level will indicate the market's readiness to sell further, and then we can expect the aforementioned targets, which I have been talking about for several weeks and months.     The wave pattern of the GBP/USD pair suggests a decline within the downtrend. There is a risk of completing the current downward wave if it is d, and not wave 1. In this case, the construction of wave 5 might begin from the current marks. But in my opinion, we are currently witnessing the construction of the first wave of a new segment. Therefore, the most that we can expect from this is the construction of wave "2" or "b". I still recommend selling with targets located near the level of 1.2442, which corresponds to 100.0% according to Fibonacci  

USD/JPY: After testing the target support at 145.90, the USD/JPY pair has been rising for two days. The price may reach the price channel line at 147.80, but it's unlikely to break above it and reach the target level of 148.50. The lack of divergence is still a hindrance to the pair's growth, and there's a good chance that the US dollar will strengthen after tonight's US inflation report.     Given these conditions, the price could test the support at 145.90, supported by the MACD indicator line, and only then will it be able to continue rising if the yen considers this plan. However, if the price settles below 145.90, it will continue to fall towards 144.73.    

USD: Oil price rebound continues ahead of US CPI report release The main foreign exchange rates have remained stable during the Asian trading session with USD/CNY continuing to trade just below the 7.3000-level and USD/JPY at just below 147.50. The verbal intervention from domestic policymakers in China and Japan to support their currencies has at least helped to stable their currencies close to recent lows although is unlikely to trigger a more sustained reversal of US dollar strength on its own. Market attention will shift back to the global inflation outlook today when the latest US CPI report for August will be released. The recent rebound in the price of oil and gasoline has continued at the start of this week which if sustained would create a more challenging backdrop for central banks next year in their ongoing efforts to bring inflation back down to their targets. The price of Brent crude oil rose further above USD92/barrel overnight extending its advance since the low last month to almost 13% and to almost 30% since the low from back in June. The latest data published by OPEC showed that global markets face a supply shortfall of more than 3 million barrels a day in Q4. If realized it could be the biggest inventory drawdown since at least 2007 according to Bloomberg. OPEC’s 13 members have pumped an average of 27.4 million barrels per day so far this quarter or roughly 1.8 million less than it believes consumers needed. This gap between OPEC supply and demand is expected to almost double in Q4 when it estimates it will need to provide 30.7 million barrels a day to satisfy demand. Saudi Arabia’s recent decision to extend production cuts until the end of this year means that OPEC supply is expected to remain stable. The developments are encouraging speculation that the price of oil could rise back above USD100/barrel by the end of this year. A negative development for global consumers and would limit room for central banks to reverse policy tightening in the year ahead.    

Analysis of GBP/USD 5M   The GBP/USD pair continued to decline on Tuesday, primarily based on technical factors, as this was in the absence of influential economic releases. The only noteworthy event was the moderately hawkish statement by Neel Kashkari, which we have already discussed. Nonetheless, this is just the opinion of one of the eighteen members of the Federal Reserve's monetary committee. At the CME, its own FedWatch tool showed a low probability of a hike for the December meeting. Therefore, the market currently does not expect a new rate hike in the US. However, this information should not be crucial for the US dollar. It should resume its trend and, consequently, continue to strengthen. It is almost guaranteed that the pair will return to the level of 1.2109, which is roughly 200 pips down from its current position. The decline may be gradual. There were only two trading signals for the pound yesterday. The price bounced off the 1.2269 level twice, but in both cases, it managed to rise by a maximum of 20 pips. This was enough to place a stop-loss to breakeven for both long positions. Therefore, both trades were certainly not losing ones. You could manually close the second trade in profit.   COT report:   COT reports on the British pound also align perfectly with what's happening in the market. According to the latest report on GBP/USD, the non-commercial group closed 3,400 long positions and 1,700 short ones. Thus, the net position of non-commercial traders decreased by another 1,700 contracts in a week. The net position indicator has been steadily rising over the past 12 months, but it has been firmly decreasing over the past three months. The British pound is also losing ground. We have been waiting for many months for the sterling to reverse downwards. Perhaps GBP/USD is at the very beginning of a prolonged downtrend. At least in the coming months, we do not see significant prospects for the pound to rise, and even if we're currently witnessing a corrective phase, it could persist for several months.   The British pound has surged by a total of 2,800 pips from its absolute lows reached last year, which is an enormous increase. Without a strong downward correction, a further upward trend would be entirely illogical (if it is even planned). We don't rule out an extension of an uptrend. We simply believe that a substantial correction is needed first, and then we should assess the factors supporting the US dollar and the British pound. A correction to the level of 1.1844 would be enough to establish a fair balance between the two currencies. The non-commercial group currently holds a total of 63,700 longs and 85,800 shorts. The bears have been holding the upper hand in recent months, and we believe this trend will continue in the near future.  

Gold Monthly: Assessing Fed policy and geopolitical risks Gold has been trading in a narrow range so far this year amid a lack of clarity surrounding the timing of the US Federal Reserve's monetary policy easing cycle. Higher borrowing costs are typically negative for gold.   Geopolitical tensions support gold prices Gold prices have held above $2,000/oz, with the precious metal being supported by safe-haven demand amid geopolitical tensions. Ongoing geopolitical risk in Ukraine and the Middle East continue to provide support to gold. Prices hit an all-time high of $2,077.49/oz on 27 December 2023. Still, we believe the Federal Reserve's wait-and-see approach will keep the rally in check. We expect prices to average $2,025/oz over the first quarter.   Geopolitical risk index   Fed policy remains key We believe Fed policy will remain key to the outlook for gold prices in the months ahead. US dollar strength and central bank tightening weighed on the gold market for most of 2023. Strong GDP and jobs growth show that the US economy continues to shrug off high borrowing costs and tight credit conditions, largely through robust government spending and consumers running down their savings. These factors will be less supportive in 2024 and inflation is on the path to 2%, so the Fed has the room to cut interest rates sharply. Our US economist still expects the Fed to start cutting rates in May. We expect gold prices to remain volatile in the months ahead as the market reacts to macro drivers, tracking geopolitical events and Fed rate policy.   Central bank buying continues Meanwhile, central bank demand maintained its momentum in the fourth quarter with a further 229 tonnes added to global official gold reserves, as shown by data from the World Gold Council. This lifted annual net demand to 1,037 tonnes – just short of the record set in 2022 of 1,082 tonnes – as geopolitical concerns pushed central banks to increase their allocation towards safe assets. Central banks’ healthy appetite for gold is also driven by concerns about Russian-style sanctions on their foreign assets, following a decision from the US and Europe to freeze Russian assets and shift strategies on currency reserves. The People’s Bank of China was the largest single gold buyer, with a total rise of 225 tonnes in its gold reserves over the year. The National Bank of Poland was the second largest buyer in 2023. Between April and November, the central bank bought 130 tonnes of gold, increasing its gold holdings by 57% to 359 tonnes. Gold tends to become more attractive in times of instability and demand has been surging over the past two years, with the trend showing few signs of abating. We believe this is likely to continue this year amid geopolitical tensions and the current economic climate.   Central banks purchases in 2023 (tonnes)   Central banks demand (tonnes)   2024 starts with continued ETF outflows Yet, total holdings in bullion-backed ETFs have continued to decline. January saw eight monthly outflows in global gold ETFs, led by North American funds. This was equivalent to a 51-tonne reduction in global holdings to 3,175 tonnes by the end of January, as shown by data from the World Gold Council. With the bets on early rate cuts from major central banks being pushed back, investors’ interest in gold ETFs faded. Looking further ahead, however, we believe we will see a resurgence of investor interest in the precious metal and a return to net inflows given higher gold prices as US interest rates fall.