Gold price analysis: Funds, central banks and ETFs are on the bullish side
|Gold is in an uptrend, which was formed in March 2021. Gold is bullish, from $1680/oz to $1900/oz, the highest price over 4 months. This bullish trend made significant pressure on this safe-haven asset.
The first CPI Index q/q of this 2021 has skyrocketed to 4.2%, twice as the FED's 2% expected inflation, which made significant concerns in the world's 1st economy. Then, the chairman of US Federal Reserve FED - Jerome Powell, released the meeting minutes to assure investors that FED was working hard and this is long-term policies, focused on changes in nominal interest rates (related to economic government "Taylor rule").
According to Reuters, China and India were the two countries that have most imported gold since December 2019, which made gold funds, hedge funds, and central banks focus on this asset.
Specifically, the Swiss announced that they had transferred 40.2 tons of gold to China, about 2.5 billion US dollars. This is the largest amount of gold ever transmitted to China in the past 14 months. Moreover, China central bank - PBoC, also wants to store about 150 tons of gold in the second quarter of 2021.
India has bought about 56.4 tons of gold in April and about 82.6 tons of gold in March. India is the second-largest client (below China) of Swiss banks in recent years.
Last but not least, the shares of gold mining companies took root to climb up significantly in the first quarter. Barrick Gold Corporation (NYSE: GOLD) grew 32%, from $18.67 to $24.7 per share. Kirkland Lake Gold Ltd. grew 26% from Feb 2021. It means those investors are keeping an eye on the stocks of gold companies.
Lastly, the gold ETF significantly collected more gold, specifically huge SPDR Gold. On 27th May, this ETF fund held about 1,044 tons.
In conclusion, not only central banks but also ETF funds are taking root for a significant bullish trend this time. Moreover, the financial overview of the USA, Australia, India, Europe, and China make a real theory that inflation is coming back to the economy.
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