Trump Attempt Boosts Gold Price

Gold’s extended rally continues to impress even the most experienced investors. This week's attempt on Donald Trump’s life has fueled the rally further. Following the attempt, gold surged to USD $2440/oz, just $10/oz shy of its all-time high. Silver, however, did not react, remaining stable after last week’s spike to its recent high of $31.75.

Global volatility remains high, driven by the current US domestic situation, with a significant change in government regime and policy appearing imminent. The odds of Trump winning the November election have risen to 59% (up from 51% pre-debate). The failed attempt on his life has only strengthened his odds, creating a martyr effect.

The Federal Reserve is increasingly hinting at an impending rate cut, which is positive for both gold and silver. US CPI numbers were below expectations for the second consecutive month, indicating that inflation continues to cool. During last week's testimony, Powell was cautioned against cutting rates before the election if he wants to maintain Republican support for Fed independence. Whether the Fed cuts rates in September or after the election, it is clear that cuts are coming in 2024. It's important to note that the market has been anticipating rate cuts for the past year without them materializing, but it continues to price in future cuts.

In China, the gold market remains cool. Wholesale gold demand in China remained weak in June, resulting in a slight year-over-year decline for the first half of 2024. However, Chinese gold ETFs have seen inflows for seven consecutive months, pushing their total assets under management and holdings to record highs. The Chinese central bank announced no change in its gold reserves for the second consecutive month.

Globally, physically backed gold ETFs witnessed their second consecutive monthly net inflows, attracting US $1.4 billion in June. Inflows were widespread, with all regions seeing positive gains except for North America, which experienced mild losses for the second month in a row.

Sources: MKS PAMP, World Gold Council