According to a recent IBJA analysis on the physical market, gold has achieved a tremendous jump, breaching the $2,000 per ounce level, launching what may be a potential climb toward its all-time high. This spike coincides with the start of a seasonally strong period for the precious metal, with the Christmas season approaching, prompting a closer look at gold’s erratic seasonality.
Over the last five years, it has consistently posted monthly gains of more than 3%, a pattern that, if continued at current rates, may push it over its mid-pandemic high. However, the reasons for this apparent pattern remain a mystery. While others ascribe it to increased gold purchases for holiday gifts, the numbers involved are thought to be insufficient to have a substantial impact on the wide global bullion market.
There are signs of traders positioning ahead of January, which is generally a stronger month for gold due to purchases for China’s Lunar New Year. However, the current environment makes it difficult for gold to accomplish significant upward movement, given its relative overextension relative to Treasury yields and the dollar.
This cautious attitude has made investors in exchange-traded funds (ETFs) hesitant to put more money into this surge. While Friday’s (November 17, 2023) close above $2,000 an ounce has improved market confidence, a sustained return of investors is required before talk of all-time highs can resume.
ETFs added 58,863 troy ounces of gold to their holdings in the recent trading session, totaling net sales of 7.13 million ounces for the year. Based on the previous spot price, these acquisitions were worth $117.8 million. Despite these new additions, total gold held by ETFs has fallen 7.6% this year to 86.6 million ounces. Gold has risen 9.7% this year to $2,000.82 per ounce, with a 0.4% increase in the most recent session.
The largest precious-metals ETF, State Street’s SPDR Gold Shares, saw little adjustments in its holdings during the recent session. The fund’s stability shows the cautious stance taken in light of recent market swings, with a total of 28.4 million ounces valued at $56.8 billion in the fund.
Furthermore, ETFs added 401,174 troy ounces of silver to their holdings in the past trading session, bringing the year’s net sales to 40.2 million ounces.