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31 Mar 2023

Gold Still Has Its Sparkle - We remain constructive on gold

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China joins the list of countries that are stocking up on gold, with the PBOC announcing yet another increase in its gold reserves in January. This trend of increasing central bank buying has been going on since late last year, peaking in 3Q22 at a record high of 400 tonnes. The motivation is multi-fold but one of the key reasons is to de-risk against the dollar and dollar assets as gold is a more 'neutral' store of value that is not cuffed to any individual economy, and gold is also resilient in geopolitical and financial crises.

Click Here: "Gold as a risk diversifier"

What does this mean for your portfolio?

We remain constructive on gold given the favourable conditions like the softening dollar and expectations of a less-aggressive US rate hike trajectory. We also continue to advocate for gold as a risk diversifier, given its low correlation with bonds and equities, in a holistic and balanced portfolio.

We like these:

• PBOC joins a long list of central banks that have accelerated gold purchases amid geopolitical uncertainty.
• Gold hit a nine-month high in February on softer dollar but traced back gains as disinflation picked up pace.
• On balance, gold prices remain well supported on long-term tailwinds; it remains an important risk diversifier in a holistic portfolio.

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