1、Gold Mid-Year Outlook 2023 Between a soft and a hard place Gold Mid-Year Outlook 2023|Between a soft and a hard place 01 About the World Gold Council Were the global experts on gold.Leveraging our broad knowledge and experience,we work to improve understanding of the gold market and underscore golds

2、 value to individuals,investors,and the world at large.Collaboration is the cornerstone of our approach.Were an association whose members are the worlds most forward-thinking gold mining companies.Combining the insights of our members and other industry partners,we seek to unlock golds evolving role

3、 as a catalyst for advancements that meet societal needs.We develop standards,expand access to gold,and tackle barriers to adoption to stimulate demand and support a vibrant and sustainable future for the gold market.From our offices in Beijing,London,Mumbai,New York,Shanghai,and Singapore,we delive

4、r positive impact worldwide.For more information Research:Jeremy De Pessemier,CFA jeremy.depessemiergold.org +44 20 7826 4789 Johan Palmberg johan.palmberggold.org+44 20 7826 4786 Krishan Gopaul krishan.gopaulgold.org+44 20 7826 4704 Juan Carlos Artigas Global Head of Research juancarlos.artigasgold

5、.org+1 212 317 3826 Louise Street louise.streetgold.org+44 20 7826 4765 Ray Jia ray.jiagold.org+86 21 2226 1107 Market Strategy:Joseph Cavatoni Market Strategist,North America joseph.cavatonigold.org+1 212 317 3844 John Reade Market Strategist,EMEA and Asia john.readegold.org+44 20 7826 4760 Content

6、s Between a soft and a hard place 2 Gold in the top tier 2 End of tightening in sight 3 Upside with risks 4 Asymmetrical benefits 4 In sum 5 Gold Mid-Year Outlook 2023|Between a soft and a hard place 02 Gold in the top tier In the first half of the year,gold increased by 5.4%in USD closing June at U

7、S$1,912.25/oz.2 Gold outperformed all other major assets apart from developed market stocks(Chart 1).Gold not only contributed positive returns to investor portfolios,it also helped dampen volatility throughout H1,especially during the mini-banking crisis in March.Behind golds performance was a comb

8、ination of factors:a relatively stable US dollar and interest rates3 event risk hedging continued central bank demand.1 As of 30 June,bond markets are pricing in an additional 25-40 bps in rate hikes by the US Fed,50 bps by the ECB,and 100bps by the BoE between now and the end of the year before pau

9、sing or even cutting rates.Chart 1:Gold has been a top performing asset in 2023 Y-t-d return in USD of major assets*As of 30 June 2023.Data based on the S&P 500 Index,MSCI EAFE Index,LBMA Gold Price PM,MSCI EM Index,ICE BofA US 3-month T-Bill Index,Bloomberg US Bond Agg,Bloomberg Global Bond Agg ex

10、US,US dollar DXY Index,Bloomberg Commodity Index,and Oil WTI Spot.Source:Bloomberg,World Gold Council 2 Based on the LBMA Gold Price PM USD as of 30 June 2023.3 Most US Treasury yields with maturities of two or more years remained relatively rangebound throughout H1 especially when compared to 2022.

11、-15%-10%-5%0%5%10%15%20%OilCommoditiesDXYGlobal bonds ex USUS bondsUS cashMSCI EMGold(US$/oz)MSCI EAFES&P 500y-t-d returnBetween a soft and a hard place Developed market central banks are nearing the end of their tightening cycles.1 For now,market consensus points to a mild contraction in the US in

12、late 2023 and slow growth in developed markets.But given the historical lag between monetary policy and economic performance,investors are wary that a hard landing may be still to come.In this context and following golds positive returns in H1,we expect gold to remain supported on the back of rangeb

13、ound bond yields and a weaker dollar.Gold should experience stronger investment demand if economic conditions deteriorate.Conversely,a soft landing or much tighter monetary policy could result in disinvestment(Figure 1).Figure 1:Theres potential upside for gold in 2023,but risks persist Golds indica

14、tive performance based on various hypothetical scenarios*See Figure 2 for a detailed review of the macroeconomic and financial conditions of each scenario.Analysis based on WGCs Gold Valuation Framework.For equivalent scenarios based on Oxford Economics data,visit Qaurum.Source:Bloomberg,World Gold

15、Council Gold Mid-Year Outlook 2023|Between a soft and a hard place 03 End of tightening in sight Both the European Central Bank(ECB)and the Bank of England(BoE)increased interest rates in June,but the US Fed kept its target rate unchanged in order to let the effects of the tightening cycle make thei

16、r way through the real economy.4 US bond market participants expect an additional hike by the Fed this year,most likely in July,followed by a sustained hold period.5 And while bond markets expect the ECB and the BoE to further increase target rates,markets anticipate the end of the cycle is near or

17、at least it will be by the end of the year.6 As monetary policy likely transitions from tightening to on-hold,market consensus is for a mild contraction in the US this year,and slow growth in developed markets.7 Should this scenario play out,our analysis suggests that gold will remain supported in 2

18、023,especially given its robust performance in H1.8 But it may not break out significantly from the range we have seen so far this year.9 This is a by-product of the four key drivers that determine golds performance(Figure 2):economic expansion risk opportunity cost momentum.4 The Fed shifts into wa

19、it-and-see mode()5 Implied probability based on Fed fund futures as of 30 June 2023.Bond markets are also pricing in rate cuts as early as Q3 2024.6 Implied probability based on overnight index swaps as of 30 June 2023.7 Based on Bloomberg Consensus expectations as of 30 June 2023.8 Analysis based o

20、n our Gold Valuation Framework.While slow economic growth in the West may have a negative effect on consumer spending,we anticipate that the Indian economy will hold up better and China will respond to potential economic stimulus later in the year providing some support to local demand.10 In additio

21、n,despite signs of cooling inflation,the combination of stock market volatility and event risk(such as geopolitical or financial crisis)is likely to keep hedging strategies,including gold,in place(see Asymmetrical benefits,p.4).Further,based on market consensus expectations,slightly lower interest r

22、ates and a weakening US dollar will help gold by reducing its opportunity cost for investors.This is consistent with the three previous hold cycles,which have lasted between six and 12 months.During these periods,gold had an average monthly return of 0.7%equivalent to an 8.4%annualised return and ab

23、ove its long-term performance(Chart 2,p.4).As we have discussed in the past,this generally happens because gold is influenced by bond yields rather than actual policy rates,as the former include market expectations of future policy decisions and the likelihood of a subsequent recession.11 With monet

24、ary policy so tight,many investors are also looking at the Institute for Supply Management(ISM)Purchasing Managers Indexes(PMIs)as signals of future weakness.Indeed,developed market PMIs(both manufacturing and services)have been deteriorating in recent months.9 The LBMA Gold Price PM mostly ranged b

25、etween US$1,800/oz and US$2,000/oz during H1.10 India economy:Why everyone wants to work with the worlds largest democracy|CNN Business;Chinas disappointing rebound could bring in more stimulus,economists say()11 In our analysis,10-year US Treasury yields have shown higher explanatory power.Figure 2

26、:Detailed macroeconomic scenarios for H2 2023 *Corresponds to Bloomberg consensus as of 30 June 2023.Fed funds(FF)refers to the upper bound Fed funds target rate.DM stands for developed markets.Gold implications based on Gold Valuation Framework.Equivalent hypothetical scenarios also available at Qa

27、urum.Source:Bloomberg,World Gold Council Gold Mid-Year Outlook 2023|Between a soft and a hard place 04 Chart 2:Gold has had a positive average return in periods when the Fed is on hold Gold monthly returns during Fed on-hold periods*As of 30 June 2023.On-hold periods include:6/200012/2000;7/20068/20

28、07;and 1/2019-6/2019.Source:Bloomberg,World Gold Council Our analysis shows that gold tends to outperform equities when manufacturing PMI is below 50 and falling(Chart 3).Further,if PMI falls below 45,history suggests golds outperformance may be even more pronounced.And while gold has underperformed

29、 against equities if manufacturing PMI is below 50 but rising,it has still delivered positive returns,showcasing the asymmetrical benefits it tends to bring to portfolios.Chart 3:Gold outperforms stocks in periods when PMI declines but still captures the upside if it rises 3-month forward returns fo

30、r gold and stocks when ISM manufacturing PMI is below 50*As of 30 June 2023.Source:Bloomberg,ISM,World Gold Council 12 Our Gold Valuation Framework relies on annual average returns rather than end-of-year to end-of-year comparisons.This is because it takes into consideration the interaction of all s

31、egments of gold demand and supply.Year-to-date,the LBMA Gold Price PM has averaged US$1,932/oz.As such,gold would need to trade at an average US$1,668/oz in H2 for the full 2023 Upside with risks If the recession risk increases,gold investment could see greater upside.An economic deterioration could

32、 be driven by a significant increase in defaults following tighter credit conditions or other unintended consequences of the high-rate environment.Historically,such periods have resulted in higher volatility,significant stock market pullbacks,and an overall appetite for high quality,liquid assets su

33、ch as gold(Chart 4).Chart 4:Gold has historically performed well during recessionary periods Gold and the USD during recessions*As of 30 June 2023.Based on LBMA Gold Price PM and US dollar DXY Index.Source:Bloomberg,NBER,World Gold Council On the flipside,expectations of a soft landing where a reces

34、sion is avoided but monetary policy remains tight could create headwinds for gold and result in disinvestment.For example,gold ETFs saw sizable outflows in June and gold holdings have fallen year-to-date.It is worth noting,however,that given golds positive performance in H1,an investor unwind would

35、need to be severe to result in the average 2023 gold price falling below US$1,800/oz its 2022 average.12 Asymmetrical benefits As investors assess the impact of restrictive monetary policy and the possibility of a recession,they often dial up defensive strategies in their asset allocation.For exampl

36、e,a common approach is to rotate part of the equity exposure into defensive sectors to limit losses during a significant market drawdown.annual average to fall below last years average of US$1,800/oz.Such a steep and sustained decline seems historically unlikely considering that the LBMA Gold Price

37、PM as of 30 June 2023 was US$1,912.25/oz and given the current macroeconomic conditions.0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%Declining regimeRising regimeFwd rtn(%)3-month fwd returns-Gold3-month fwd returns S&P500-10%0%10%20%30%Nov/69-Nov/70Oct/73-Mar/75Dec/79-Jul/80Jun/81-Nov/82Jun/90-Mar/91Feb/01-

38、Nov/01Nov/07-Jun/09Jan/20-Apr/20NBER RecessionsReturnDXYGold Gold Mid-Year Outlook 2023|Between a soft and a hard place 05 To illustrate this,we compare two hypothetical defensive strategies:one where 20%of the equity allocation is invested in defensive sectors,and one where 10%is invested in defens

39、ive sectors and 10%in gold(Table 1).Our analysis shows that,over the past 25 years,the strategy including gold would have improved returns,while reducing volatility and drawdown.Table 1:Gold may help improve defensive strategies Comparison of hypothetical investment strategies*Baseline strategy Defe

40、nsive strategy(a)Defensive strategy(b)S&P 500 100%80%80%Defensive sectors 20%10%Gold 10%Total 100%100%100%Annualised returns 7.0%7.7%8.4%Volatility 15.5%15.0%14.6%Reward to risk 45.3%51.4%57.2%Drawdown-50.6%-48.0%-44.1%*Based on data from December 1998(due to data availability)to May 2023.Defensive

41、sectors include Consumer Staples,Energy,Healthcare,Telecom,and Utilities.Hypothetical strategy invests in defensive strategy at the peak and disinvests at the trough.Source:Bloomberg,World Gold Council In sum Should the expected mild US contraction materialise,the strong first half for gold is likel

42、y to give way to a more neutral H2.In this scenario,gold would draw support from a weaker US dollar and stable bond yields,although this would be met by downward pressure from cooling inflation.If history is a guide,monetary policy hold cycles tend to spell a higher-than-average monthly return for g

43、old.A more positive gold environment would result from a more pronounced economic downturn,thanks to an accompanying increase in volatility and risk-off appetite.Conversely,gold would face challenges if tightening continues for longer than expected.Similarly,if a soft landing were engineered,it woul

44、d favour risk-on assets and a stronger US dollar,likely resulting in gold disinvestment.However,given the inherent uncertainty in predicting the global macroeconomic outcome,we believe that golds positive asymmetrical performance can be a valuable component to investors asset allocation toolkit.Gold

45、 Mid-Year Outlook 2023|Between a soft and a hard place 06 Important Information and Disclosures 2023 World Gold Council.All rights reserved.World Gold Council and the Circle device are trademarks of the World Gold Council or its affiliates.All references to LBMA Gold Price are used with the permissi

46、on of ICE Benchmark Administration Limited and have been provided for informational purposes only.ICE Benchmark Administration Limited accepts no liability or responsibility for the accuracy of the prices or the underlying product to which the prices may be referenced.Other content is the intellectu

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48、n and statistics are copyright and/or other intellectual property of the World Gold Council or its affiliates(collectively,“WGC”)or third-party providers identified herein.All rights of the respective owners are reserved.The use of the statistics in this information is permitted for the purposes of

49、review and commentary(including media commentary)in line with fair industry practice,subject to the following two pre-conditions:(i)only limited extracts of data or analysis be used;and(ii)any and all use of these statistics is accompanied by a citation to World Gold Council and,where appropriate,to

50、 Metals Focus,Refinitiv GFMS or other identified copyright owners as their source.World Gold Council is affiliated with Metals Focus.WGC does not guarantee the accuracy or completeness of any information nor accepts responsibility for any losses or damages arising directly or indirectly from the use

51、 of this information.This information is for educational purposes only and by receiving this information,you agree with its intended purpose.Nothing contained herein is intended to constitute a recommendation,investment advice,or offer for the purchase or sale of gold,any gold-related products or se

52、rvices or any other products,services,securities,or financial instruments(collectively,“Services”).This information does not take into account any investment objectives,financial situation or particular needs of any particular person.Diversification does not guarantee any investment returns and does

53、 not eliminate the risk of loss.Past performance is not necessarily indicative of future results.The resulting performance of any investment outcomes that can be generated through allocation to gold are hypothetical in nature,may not reflect actual investment results and are not guarantees of future

54、 results.WGC does not guarantee or warranty any calculations and models used in any hypothetical portfolios or any outcomes resulting from any such use.Investors should discuss their individual circumstances with their appropriate investment professionals before making any decision regarding any Ser

55、vices or investments.This information contains forward-looking statements,such as statements which use the words“believes”,“expects”,“may”,or“suggests”,or similar terminology,which are based on current expectations and are subject to change.Forward-looking statements involve a number of risks and un

56、certainties.There can be no assurance that any forward-looking statements will be achieved.WGC assumes no responsibility for updating any forward-looking statements.Information regarding QaurumSM and the Gold Valuation Framework Note that the resulting performance of various investment outcomes that

57、 can generated through use of Qaurum,the Gold Valuation Framework and other information are hypothetical in nature,may not reflect actual investment results and are not guarantees of future results.WGC provides no warranty or guarantee regarding the functionality of the tool,including without limitation any projections,estimates or calculations.World Gold Council 15 Fetter Lane,London EC4A 1BW United Kingdom T+44 20 7826 4700 F+44 20 7826 4799 W www.gold.org Published:July 2023