Weekend Edition: Going for Gold
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Why is gold hitting new highs despite lower inflation and Middle‑East tensions?
With the crisis in the Middle East, gold has been rising in price, but it's not just the latest iteration this week. In fact, if anything this week it's risen less. But it has been hitting new highs repeatedly a lot lately. So is it more than just geopolitical unrest? If so, what is driving prices higher? And if the price gets too high, does that make it a risky investment? Or does a more volatile world mean the more interest there will be in gold, maybe for some time to? That's this week. The morning call from NAB with Phil Dobby, the weekend edition. The price of gold has been hitting record highs a lot lately, but is it just a fleeting period given all this global uncertainty? You'd think, for example, uh, you know, a whole lot of it would be a hedge against inflation, but as inflation comes down, gold might also come down in price as well, you'd think, and yet it seems to be more popular than ever.
With Central banks buying it up as well to add to their reserves. So who else is buying it? Why? And what does the future look like for gold? Well, I tell you, we've picked quite a week to talk about this with John Reed. He is senior market strategist of the World Gold Council. He's based in London. He joins me today for the weekend edition. So how big is gold right now for institutional investors and for retail investors? I mean the price suggests it's becoming more and more popular, but is that the case in both sectors? I know institutional investors seem to have picked up in it, don't they?
They do, um, but only in certain segments. I mean I think the one of the points about gold is that it is a very big, but also an extremely international market. And because demand breaks up into different categories, whether it's central bank demand or investment or jewelry or even small uses in industrial demand, different things can drive gold at different times. And look, it's not a flash in the pan, as you've said. Uh yes, we're just about at all times. Highs, but we've hit all time highs 30 times this year, according to uh London Bullion Market Association daily benchmark pricing. So this is something that's been going on for a while, not just associated with the uh um, you know, with the recent uh escalation of tension in the Middle East.
But I'd argue that institutional investors are only partly involved. that Western retail investors actually haven't been playing much of a role in gold this year or indeed over the last couple of years. It's been buying from emerging market uh buyers of all types, whether that's jewelry, whether that's emerging market central banks, whether that's emerging market financial investors, or whether that's emerging market buyers of bars and coins.
And so they are helping push up the price generally. 'Cause I mean if you you talk about, you know, it's hit highs and it's d repeatedly done that. I mean if you look back to nineteen eighty, pretty high then, if you bought then, uh you'd be feeling pretty destitute by the, you know, turn of the century. But into this century, gold is now five times what it was in two thousand, whereas, you know, prices generally have only doubled over that period. Can it can it keep on performing like that or is it becoming a bit of a bubble?
I don't think it's a bubble. Um I do think there is a quite a lot of speculative money, short-term, speculative money that's plays gold via various exchanges, particularly the Comex Futures Exchange in New York. They hold some decent long positions at the moment, so there is a a bit of froth in the market. But um I wouldn't call it a bubble. I think the other thing I'd say is work we've done suggests that future returns for gold should be as something along the lines of um US inflation plus maybe two to three percent. Okay, so let's pretend US inflation is two percent. I'm sure it will be again soon. You would'd be expecting four to five percent nominal returns in gold. Now last year, twenty twenty three, it was up fifteen percent.
Year to date in twenty twenty four, it's up about twenty eight percent, both in US dollars.
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Chapters
8 chapters
1
Why is gold hitting new highs despite lower inflation and Middle‑East tensions?
0:01–5:56
2
Who is buying the most gold today – emerging‑market investors or Western institutions?
5:56–10:59
3
Why are emerging‑market central banks increasing their gold purchases?
10:59–16:41
4
Is gold still a reliable hedge against inflation in today’s monetary environment?
16:41–22:36
5
How are gold ETFs and retail demand performing in Western markets?
22:36–27:52
6
Does Bitcoin or other crypto threaten gold’s role as a safe‑haven asset?
27:52–30:32
7
Will gold remain a strategic, long‑term portfolio allocation for investors?
30:32–31:07
8
What are the key takeaways and next‑week outlook for the gold market?
31:07–31:09