Gold has the particularity of not being correlated with equity and bond markets and has also been used as a safe haven since time immemorial, especially in periods of high inflation and financial crisis, as we saw during the period recent (2007-2012) marked by the subprime crisis, then by the crisis on European peripheral debts.
In addition, Gold is sensitive to other factors such as central bank purchases and currently there are significant flows of purchases from central banks of emerging countries such as China and India. The dynamics of US interest rates are also very important for gold prices because this precious metal naturally delivers neither dividends nor coupons, so the rate hike by the FED is a central issue for gold prices. If the FED does not accelerate the pace of rate hikes in the coming months it should be beneficial for gold prices.
On the other hand, in the event of an inflationary spiral as in the 1970s, a very sharp rise in interest rates becomes good news for Gold as a safe haven. Gold can also be seen as a diversification alongside a stock portfolio, since the evolution of the precious metal is not correlated with economic cycles and can follow a very different evolution or opposite to the trend of the stock indices, but not necessarily.
Finally Gold is denominated in US $, which can have a double effect since on the one hand the dollar is itself considered as a safe haven and the decline of the dollar tends to be favorable to commodities.
Rumors of embargoes / quotas on Gold imports in India following a demonetization policy have also weighed on prices since the end of 2016, while India is the largest consumer of gold especially for jewelery.
But the FED's currently measured policy on rates and the still significant threats to possible trade conflicts between China and the US (or even with Germany and Japan), the still underestimated consequences of Brexit as well as the very large indebtedness of the largest economies (US, China, Japan, Europe) favor a rebound of the yellow metal.
Instruments : BULLP (ETFS in Euro), IAU (iShares in USD)
