Precious Metals Weekly Market Update - January 16th 2024

Geopolitical risks are escalating as the US becomes more and more involved in the conflict in the Middle East. In addition to dealing with Hamas, Israel and its Western allies are engaging daily with the Houthi rebels in Yemen and Hezbollah in Lebanon. Global leaders are convening in the Middle East in an apparent attempt to deescalate the situation.

December's inflation numbers exceeded expectations at 3.4% compared to the anticipated 3.2% YoY. This has reignited discussions about when the Fed might initiate interest rate cuts. The likelihood of a rate cut in March has diminished as a result of the higher-than-expected December numbers.

Despite gold's impressive 13% increase in 2023, gold ETFs experienced net outflows for the year. European ETF outflows surpassed North America’s inflows and those of other regions, including Asia. It's worth noting that flows in ETFs often reflect short-term opinions and the preferences of investors who may not be particularly loyal to precious metals longer term.

Closing on a positive note, gold achieved all-time record highs priced in 9 out of 10 major currencies in 2023, with the Swiss Franc being the sole exception (see Table 1 below).

 Table 1: Record high set in all but one currency (CHF) in 2023

*Data to 31 December 2023. Based on the LBMA Gold Price PM in USD, expressed in local currencies.

Source: Bloomberg, ICE Benchmark Administration, World Gold Council

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Mark Yaxley, CEO of Strategic Wealth Preservation (SWP), began his journey in precious metals with Kitco Metals in 2006. Co-founding SWP in 2014, he now guides individual and commercial clients towards their investment goals. Renowned for his 'Inside the Vault' YouTube series, Mark has helped millions gain insights into gold and silver bullion ownership.