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Global <keyword id="19978688" type="General" weightage="100" keywordseo="gold-demand" source="keywords">gold demand</keyword> in Q2 2024, excluding over-the-counter (OTC) transactions declined by 6% year-on-year to 929 tonnes, primarily due to a sharp fall in jewelry consumption, according to the latest report of the <keyword id="20195223" type="General" weightage="20" keywordseo="World-Gold-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="World Gold Council" meta.hostid="261" meta.entityid="World Gold Council">World Gold Council</keyword>. However, when including <keyword id="22654356" type="General" weightage="20" keywordseo="OTC-investment" source="keywords">OTC investment</keyword>, total gold demand increased by 4% YoY to 1,258 tonnes, marking the highest Q2 figure since data collection began in 2000. The record-high <keyword id="19910265" type="General" weightage="20" keywordseo="gold-prices" source="keywords">gold prices</keyword> took a significant toll on jewelry consumption. Volumes fell 19% YoY to 391 tonnes, the lowest in four years. The report reveals a mixed picture for the Indian market in the second quarter of 2024. While overall gold demand showed a modest increase due to investment in OTC markets and central bank purchases, India witnessed trends that reflect broader market shifts. This decline reflects the impact of elevated gold prices on consumer purchasing behaviour, particularly in markets sensitive to price fluctuations, including India. <keyword id="19946830" type="General" weightage="20" keywordseo="central-banks" source="keywords">Central banks</keyword> continued to be significant players in the gold market, with net gold buying increasing by 6% YoY to 184 tonnes. This rise is attributed to the need for portfolio protection and diversification in a volatile economic environment. In June alone, central banks reported net purchases of 12 tonnes, with key contributors including the Central Bank of Uzbekistan and the Reserve Bank of India, both adding 9 tonnes to their reserves. The Monetary Authority of Singapore was noted as the largest seller, offloading 12 tonnes in the same month. The LBMA (PM) gold price averaged a record $ 2,338 per ounce in Q2 2024, up 18% YoY and 13% QoQ. Gold prices peaked at a new high of $2,427 per ounce in May. This environment drove significant investment and production trends, with total gold supply growing by 4% YoY to 1,258 tonnes. Mine production reached a record 929 tonnes for a second quarter, while recycling supply was the highest since 2012, reflecting the response to rising prices. OTC investment was a major component of the Q2 total gold demand, amounting to 329 tonnes. This, along with continued central bank buying, contributed to pushing gold prices to record highs during the quarter. Despite a minor 7-tonne decline in global gold <keyword id="19930506" type="General" weightage="20" keywordseo="etf" source="keywords">ETF</keyword> holdings in Q2, this was an improvement compared to the 21-tonne drop in Q2 2023. The decline in ETF holdings was followed by early outflows and nascent inflows later in the quarter. Retail bar and coin investment experienced a 5% decline to 261 tonnes, mainly due to weakened demand from Western markets. Conversely, gold used in technology saw an 11% YoY increase, driven by the continued growth in <keyword id="19904566" type="General" weightage="20" keywordseo="artificial-intelligence" source="keywords">artificial intelligence</keyword> (AI) applications. <keyword id="21088407" type="General" weightage="20" keywordseo="investment-trends" source="keywords">Investment trends</keyword> continued to diverge regionally. Eastern markets exhibited robust demand for bars, coins, and ETFs, while Western markets saw marked declines. However, Western ETF investment flows have shown signs of recovery in early Q3 2024. Looking ahead to the full year of 2024, it is expected that revived Western investment flows will help balance out weaker consumer demand, and potentially slower central bank buying, compared to 2023.

Global gold demand drops 6% in Q2 2024 due to slump in jewelry consumption, OTC investment pushes the total to record high

Ah, <keyword id="18712" type="General" weightage="20" keywordseo="Gold" source="Orion">gold</keyword>! The shiny metal that's been making humans lose their minds since time immemorial. And yet, from King Midas to our neighbourhood aunty and even our moms (and secretly dads), everyone seems to have a super soft spot for the bullion. But here's the kicker: right now, gold prices are breaking all records on their upward trajectory! As of today, prices of 24k carat gold have passed the Rs 80,000 mark per 10 grams. And if experts are to be believed, this train isn't stopping anytime soon! So, as shiny as gold might look, adding even a bit of its glitter as we start decking up for the festive season might not be so easy on your pockets. But let's admit it—we love our gold and can't live without it. No wonder India is the second-largest consumer of the yellow metal in the world, only behind <keyword id="1334" type="General" weightage="20" keywordseo="China" source="Orion">China</keyword>. Such is our fondness for the metal that the <keyword id="20195223" type="General" weightage="20" keywordseo="world-gold-council" source="keywords">World Gold Council</keyword> had to up our 2024 annual demand forecast to 850 tonnes, up from the previously estimated 750 tonnes. However, our love for gold isn't just about looking fabulously embellished and blinding people with its bling. Indians also see gold as a long-term, trusty investment, supporting our other hard-earned assets, especially when high <keyword id="22195" type="General" weightage="20" keywordseo="Inflation" source="Orion">inflation</keyword> rates pull our returns down. After all, while inflationary pressures generally weaken the purchasing power of our regular paper money, gold is built differently. When the world is buckling to inflation, gold gains value during these times. This is also why it is considered a solid hedge against inflation. With Diwali and Dhanteras knocking at our doors, the inflation demon continued to bother India like a guest who refused to leave. Just last month, the Consumer Price Index (CPI) stood at 5.49%, much higher than the anticipated levels. Moreover, the diverging policy stances among central bankers worldwide, growing geopolitical tensions, tough job markets, and extreme weather events are only adding to the uncertainty. In such economically uncertain times, what should your gold strategy be this festive season? To buy or not to buy, that is the question. Well, let’s get to it. <h2><keyword id="20050894" type="General" weightage="100" keywordseo="gold-etfs" source="keywords">Gold ETFs</keyword> to the rescue</h2>See, buying physical gold jewellery is certainly a flex, but also a financial fuss. First, you pay a heavy amount to buy gold. Not to mention all those extra, hefty jewellery-making charges. And then you pay even more money to keep it safe in a bank locker, lest it get stolen. But what if we tell you that you can own pure <keyword id="3311599" type="General" weightage="20" keywordseo="24K-gold" source="Orion">24k gold</keyword>, minus all these frills? Welcome, Gold ETFs (Exchange Traded Funds). Simply put, gold ETFs are like the cool cousins of your traditional gold investments. Instead of stashing gold bars under your mattress like those maniac millionaires we see in Bollywood films, you can now invest and trade in gold through the stock market. It's basically buying units of an ETF on the stock exchange that directly mirror the ongoing domestic prices of gold. Generally, gold ETFs are equivalent to 99.5% pure physical gold bars, and each ETF unit denotes actual, one gram of gold. And let's face it, who would not want that golden glow in their lives? Gold ETFs have witnessed an over seven-fold surge in their AUM (assets under management) in just the last five years. From Rs 5,613.22 crore in September 2019 to Rs 39,823.50 crore in September 2024, gold ETFs seem to be in-thing. Inflows in gold ETFs have shot up by a whopping 2,695% over the last 5 years. In September 2019, gold ETFs had garnered a mere Rs 44.11 crore. Compare that to the inflows worth Rs 1,232.99 crore gold ETFs received last month. Talk about growing, or glowing popularity! In fact, in just 2024, inflows in gold ETFs have surged by nearly 88% since the beginning of this calendar year. From Rs 657.46 crore in January 2024 to Rs 1,232.99 crore in September 2024, good old gold is never out of season. <h2>So, how do these ETFs work? Should I invest in them now?</h2>All you need is a Demat account. Log into your account, choose the gold ETF scheme you want to invest in, and voila! You’re now a bullion-aire! All your gold ETF units will be stored in this account. Then, you can buy and sell gold ETFs just like you buy shares—in real-time. So, if gold prices inch upwards, which is where gold is currently going, the value of your ETF units will also rise in lockstep. Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, says that of late, gold ETFs have been increasingly gaining popularity among investors due to the liquidity, safety and transparency they offer. "With the escalating global geopolitical tensions boosting the ‘safe-haven’ appeal of the bullion, investors are preferring to park their funds in gold ETFs as compared to investing in physical gold, as there is no hassle of storing it. The heightened activity in gold ETFs is also driven by the prospects of an imminent further interest rate cut by the <keyword id="20078761" type="General" weightage="20" keywordseo="u-s-federal-reserve" source="keywords">U.S. Federal Reserve</keyword> in the coming months,” he added. “Investors with a short- to medium-term investment horizon may consider investment through gold ETFs. A buy-on-dips strategy here may help investors capitalise on a temporary correction in prices. Also, given the current market dynamics where equities are showing mixed trends, a modest, 5-10% allocation to gold may serve as a hedge against inflation and market volatility, which may help you balance risks in an optimum manner,” Kumar noted. <h2> Wait, there is no dearth of options</h2>But if ETFs make you go WTF, there’s always digital gold. You can invest in the yellow metal without actually physically holding it for as low as Rs 1. The best part? You can buy or sell this gold 24 X7 seamlessly via multiple apps without having to pay storage costs. On your behalf, your gold is stored in insured vaults by the seller. But remember, digital gold continues to remain unregulated territory in the country, where you venture at your own risk. In 2021, market watchdog SEBI had even asked its members to desist from selling digital gold. Then there are gold mutual funds and the Sarkari SGBs, or sovereign gold bonds. While gold mutual funds invest primarily in gold ETFs, SGBs are issued by the <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword> and are also a reliable substitute for holding physical gold. However, with the RBI currently putting brakes on issuing SGBs, investing in them is out of the question. Plus, you should only get your hands on SGBs if you're in for the long haul. Apart from a 2.5% p.a. interest, you don't have any yearly earnings from them. Moreover, no premature redemption is allowed before 5 years, and you'll have to wait a good 8 years to maximise your returns. <h2> Okay, tell me about returns</h2>In contrast, the seventeen gold ETF schemes currently present in the market offer an average one-year return of 29.12%. Stay with it a little longer, and you can end up with returns worth 16.93% and 13.59% over a 3 and 5-year period, respectively. If you look at it, these returns are comparable with the returns delivered by actual, physical gold. Data from Value Research indicates that gold, as a commodity, has delivered returns worth 27.24%, 16.53%, and 14.18% over a 1, 3, and 5-year period, respectively. So, worth investing, right? <h2>What are the risks?</h2>See, stock markets are as unpredictable as monsoons in Mumbai. One significant market correction can wash away your returns, and one sunny day or an upswing can leave you wallowing in wealth. Since your gold investments are directly linked to these markets, you should steel yourself up for some volatility. Plus, international gold prices are in dollars. So, if our rupee decides to take a nosedive, your returns might look a bit tarnished. Also, know that your ETF might not always perfectly mirror gold prices, which is also known as a tracking error. It's like expecting your Zomato-ordered food to look exactly like the picture on the menu—it's close, but not quite. Then there’s the taxation bit. The budget this year brought down the <keyword id="20552259" type="General" weightage="20" keywordseo="ltcg" source="keywords">LTCG</keyword> (long-term capital gains tax) on gold ETFs from the previous 20% to 12.5% (sans indexation). LTCG is what you pay if you sell your ETF units after 12 months. If you sell your gold ETF units within a year and make handsome returns, the tax you’ll have to pay will be equivalent to your income tax slab rate. <h2>Is gold just for old?</h2>A survey by fintech firm Moneyview thinks otherwise. Per their findings, over 85% of the 3,000 respondents it talked to considered gold to be a valuable asset for wealth preservation, with its intrinsic value and historical performance continuing to drive consumer confidence. Particularly, young investors in the age group of 25–40 years are also investing in gold via both physical and digital ways to build wealth for retirement and other long-term goals. So, young or old, everyone’s going for gold. So, this festive season, with gold prices going north, investing in gold can add that much-needed glitz to your financial attire. But remember, don't go overboard since gold isn't exactly a high-return-yielding asset. But whether you're a seasoned investor looking to diversify or a newbie trying to make their way in the markets, investing in gold offers you a glittering safety cushion. Just remember, while gold can make your portfolio shine, it's your smart investment decisions that truly make you golden. Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified, and registered advisors for professional and personalised financial advice.

Can investing in gold this festive season add the much-touted Midas touch to your investments?

<div type="image" title="Save yourself the trouble of buying physical gold this Diwali, and instead, go digital with Gold ETFs!" height="900" width="1200" msid="114507055" hostid="261" sizebytes="439216" caption="&amp;lt;p&amp;gt;Save yourself the trouble of buying physical gold this Diwali, and instead, go digital with Gold ETFs!&amp;lt;/p&amp;gt;"></div> Ah, <keyword id="18712" type="General" weightage="20" keywordseo="Gold" source="Orion">gold</keyword>! The shiny metal that's been making humans lose their minds since time immemorial. And yet, from <keyword id="23657519" type="General" weightage="20" keywordseo="king-midas" source="keywords">King Midas</keyword> to our neighbourhood aunty and even our moms (and secretly dads), everyone seems to have a super soft spot for the <keyword id="6384667" type="General" weightage="20" keywordseo="Bullion" source="Orion">bullion</keyword>. But here's the kicker: right now, gold prices are breaking all records on their upward trajectory! As of today, prices of 24k carat gold have passed the Rs 80,000 mark per 10 grams. And if experts are to be believed, this train isn't stopping anytime soon! So, as shiny as gold might look, adding even a bit of its glitter as we start decking up for the festive season might not be so easy on your pockets. But let's admit it—we love our gold and can't live without it. No wonder India is the second-largest consumer of the yellow metal in the world, only behind China. Such is our fondness for the metal that the <keyword id="20195223" type="General" weightage="20" keywordseo="world-gold-council" source="keywords">World Gold Council</keyword> had to up our 2024 annual demand forecast to 850 tonnes, up from the previously estimated 750 tonnes. However, our love for gold isn't just about looking fabulously embellished and blinding people with its bling. Indians also see gold as a long-term, trusty investment, supporting our other hard-earned assets, especially when high <keyword id="22195" type="General" weightage="20" keywordseo="Inflation" source="Orion">inflation</keyword> rates pull our returns down. After all, while inflationary pressures generally weaken the purchasing power of our regular paper money, gold is built differently. When the world is buckling to inflation, gold gains value during these times. This is also why it is considered a solid hedge against inflation. With <keyword id="188" type="General" weightage="20" keywordseo="Diwali" source="Orion">Diwali</keyword> and <keyword id="4067" type="General" weightage="20" keywordseo="Dhanteras" source="Orion">Dhanteras</keyword> knocking at our doors, the inflation demon continued to bother India like a guest who refused to leave. Just last month, the Consumer Price Index (CPI) stood at 5.49%, much higher than the anticipated levels. Moreover, the diverging policy stances among central bankers worldwide, growing geopolitical tensions, tough job markets, and extreme weather events are only adding to the uncertainty. In such economically uncertain times, what should your gold strategy be this festive season? To buy or not to buy, that is the question. Well, let’s get to it. <h2><keyword id="20050894" type="General" weightage="100" keywordseo="gold-etfs" source="keywords">Gold ETFs</keyword> to the rescue</h2>See, buying physical gold jewellery is certainly a flex, but also a financial fuss. First, you pay a heavy amount to buy gold. Not to mention all those extra, hefty jewellery-making charges. And then you pay even more money to keep it safe in a bank locker, lest it get stolen. But what if we tell you that you can own pure 24k gold, minus all these frills? Welcome, Gold ETFs (Exchange Traded Funds). Simply put, gold ETFs are like the cool cousins of your traditional gold investments. Instead of stashing gold bars under your mattress like those maniac millionaires we see in Bollywood films, you can now invest and trade in gold through the stock market. It's basically buying units of an <keyword id="19930506" type="General" weightage="20" keywordseo="etf" source="keywords">ETF</keyword> on the stock exchange that directly mirror the ongoing domestic prices of gold. Generally, gold ETFs are equivalent to 99.5% pure physical gold bars, and each ETF unit denotes actual, one gram of gold. And let's face it, who would not want that golden glow in their lives? Gold ETFs have witnessed an over seven-fold surge in their AUM (assets under management) in just the last five years. From Rs 5,613.22 crore in September 2019 to Rs 39,823.50 crore in September 2024, gold ETFs seem to be in-thing. Inflows in gold ETFs have shot up by a whopping 2,695% over the last 5 years. In September 2019, gold ETFs had garnered a mere Rs 44.11 crore. Compare that to the inflows worth Rs 1,232.99 crore gold ETFs received last month. Talk about growing, or glowing popularity! In fact, in just 2024, inflows in gold ETFs have surged by nearly 88% since the beginning of this calendar year. From Rs 657.46 crore in January 2024 to Rs 1,232.99 crore in September 2024, good old gold is never out of season. <h2>So, how do these ETFs work? Should I invest in them now?</h2>All you need is a Demat account. Log into your account, choose the gold ETF scheme you want to invest in, and voila! You’re now a bullion-aire! All your gold ETF units will be stored in this account. Then, you can buy and sell gold ETFs just like you buy shares—in real-time. So, if gold prices inch upwards, which is where gold is currently going, the value of your ETF units will also rise in lockstep. Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, says that of late, gold ETFs have been increasingly gaining popularity among investors due to the liquidity, safety and transparency they offer. "With the escalating global geopolitical tensions boosting the ‘safe-haven’ appeal of the bullion, investors are preferring to park their funds in gold ETFs as compared to investing in physical gold, as there is no hassle of storing it. The heightened activity in gold ETFs is also driven by the prospects of an imminent further interest rate cut by the <keyword id="20078761" type="General" weightage="20" keywordseo="u-s-federal-reserve" source="keywords">U.S. Federal Reserve</keyword> in the coming months,” he added. “Investors with a short- to medium-term investment horizon may consider investment through gold ETFs. A buy-on-dips strategy here may help investors capitalise on a temporary correction in prices. Also, given the current market dynamics where equities are showing mixed trends, a modest, 5-10% allocation to gold may serve as a hedge against inflation and market volatility, which may help you balance risks in an optimum manner,” Kumar noted. <h2>Wait, there is no dearth of options</h2>But if ETFs make you go WTF, there’s always digital gold. You can invest in the yellow metal without actually physically holding it for as low as Rs 1. The best part? You can buy or sell this gold 24 X7 seamlessly via multiple apps without having to pay storage costs. On your behalf, your gold is stored in insured vaults by the seller. But remember, digital gold continues to remain unregulated territory in the country, where you venture at your own risk. In 2021, market watchdog SEBI had even asked its members to desist from selling digital gold. Then there are gold mutual funds and the Sarkari SGBs, or sovereign gold bonds. While gold mutual funds invest primarily in gold ETFs, SGBs are issued by the RBI and are also a reliable substitute for holding physical gold. However, with the RBI currently putting brakes on issuing SGBs, investing in them is out of the question. Plus, you should only get your hands on SGBs if you're in for the long haul. Apart from a 2.5% p.a. interest, you don't have any yearly earnings from them. Moreover, no premature redemption is allowed before 5 years, and you'll have to wait a good 8 years to maximise your returns. <h2>Okay, tell me about returns</h2>In contrast, the seventeen gold ETF schemes currently present in the market offer an average one-year return of 29.12%. Stay with it a little longer, and you can end up with returns worth 16.93% and 13.59% over a 3- and 5-year period, respectively. If you look at it, these returns are comparable with the returns delivered by actual, physical gold. Data from Value Research indicates that gold, as a commodity, has delivered returns worth 27.24%, 16.53%, and 14.18% over a 1, 3, and 5-year period, respectively. So, worth investing, right? <h2>What are the risks?</h2>See, markets are as unpredictable as monsoons in Mumbai. One significant market correction can wash away your returns, and one sunny day or an upswing can leave you wallowing in wealth. Since your gold investments are directly linked to these markets, you should steel yourself up for some volatility. Plus, international gold prices are in dollars. So, if our rupee decides to take a nosedive, your returns might look a bit tarnished. Also, know that your ETF might not always perfectly mirror gold prices, which is also known as a tracking error. It's like expecting your Zomato-ordered food to look exactly like the picture on the menu—it's close, but not quite. Then there’s the taxation bit. The budget this year brought down the LTCG (long-term capital gains tax) on gold ETFs from the previous 20% to 12.5% (sans indexation). LTCG is what you pay if you sell your ETF units after 12 months. If you sell your gold ETF units within a year and make handsome returns, the tax you’ll have to pay will be equivalent to your income tax slab rate. <h2>Is gold just for old?</h2>A survey by fintech firm Moneyview thinks otherwise. Per their findings, over 85% of the 3,000 respondents it talked to considered gold to be a valuable asset for wealth preservation, with its intrinsic value and historical performance continuing to drive consumer confidence. Particularly, young investors in the age group of 25–40 years are also investing in gold via both physical and digital ways to build wealth for retirement and other long-term goals. So, young or old, everyone’s going for gold. So, this festive season, with gold prices going north, investing in gold can add that much-needed glitz to your financial attire. But remember, don't go overboard since gold isn't exactly a high-return-yielding asset. But whether you're a seasoned investor looking to diversify or a newbie trying to make their way in the markets, investing in gold offers you a glittering safety cushion. Just remember, while gold can make your portfolio shine, it's your smart investment decisions that truly make you golden. Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified, and registered advisors for professional and personalised financial advice.

Simply put: Can investing in gold this festive season add the much-touted Midas touch to your investments?

<ul class="summary-list"><li>The price of gold hit all-time highs this week.</li><li>Falling interest rates and rising geopolitical tensions boost gold's appeal as a safe haven asset.</li></ul>The price of <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/gold-price">gold</a> has soared this year.The precious metal hit a record high of $2,772 per troy ounce this week and has risen in six of the past seven weeks.With year-to-date gains of about 33%, gold returns have outpaced the broader stock market, including the tech-heavy <a target="_blank" class="" href="https://markets.businessinsider.com/index/nasdaq_100">Nasdaq 100</a>, by about 10 percentage points.And since the bull market in stocks began in October 2022, gold has outpaced equity gains, returning 67% compared to the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500's</a> return of about 63%, according to data from YCharts.Those superior returns make the metal one of the world's hottest investments.The largest gold ETF, the SPDR Gold Shares, has $78 billion in assets under management and has seen about $5 billion of inflows in the past six months, according to data from ETF.com.Physical gold is also having a moment. Costco has consistently sold out of gold bars when they become available on their website and Wells Fargo estimates that <a target="_blank" class="" href="https://www.businessinsider.com/costco-gold-bars-silver-coins-monthly-sales-wells-fargo-bullion-2024-4">Costco sells up to $200 million in gold bars</a> and silver coins to its members each month.It's been a perfect storm for the yellow metal, and the outlook suggests more gains ahead. Here's what's going on.<h3 id="5edb3548-699e-4d4d-ba18-d306c30fcf12">Demand from central banks</h3>Global central banks have been on a gold-buying spree over the past few years.According to the World Gold Council, central banks purchased a record 483 tons of gold in the first half of the year. Central banks from Turkey, India, and China topped the list of the biggest buyers.Part of the surge in demand is from countries that want to diversify their holdings away from the US dollar. "We believe that the tripling in central bank purchases since mid-2022 on fears about US financial sanctions and US sovereign debt is structural and will continue," <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/gold-price-outlook-buy-continued-rally-next-year-2025-goldman-2024-9">Goldman Sachs said</a> in a note last month.This dynamic has been on display since Russia invaded Ukraine in 2022, as America sought to inflict maximum economic damage on Russia via sanctions. But it's harder to implement sanctions against a country that is less reliant on the dollar, and one way to be less reliant on the dollar is to buy gold.It is a dynamic that the US should be closely monitoring, according to economist Mohamed El-Erian.El-Erian wrote <a target="_blank" class="" href="https://www.ft.com/content/b5fb1e6b-bb8d-4ab5-9c92-f1f6fc40a54b?utm_source=substack&amp;utm_medium=emailhttps://www.ft.com/content/b5fb1e6b-bb8d-4ab5-9c92-f1f6fc40a54b?utm_source=substack&amp;utm_medium=email">in an op-ed for the FT</a> this week that the persistent rise in gold "captures an increasingly persistent behavioural trend among China and 'middle power' countries.""There is also interest in exploring possible alternatives to the dollar-based payments system that has been at the core of the international architecture for some 80 years."Russia has had some success with this, as it's managed to navigate its economy away from a full-fledged downturn after the US imposed wide-ranging sanctions in 2022.Russia's ability to steer its de-dollarized economy away from a crisis could give other countries confidence to lessen their dependence on the dollar, which ultimately benefits gold."What is at stake here is not just the erosion of the dollar's dominant role but also a gradual change in the operation of the global system," El-Erian said. "As it develops deeper roots, this risks materially fragmenting the global system and eroding the international influence of the dollar and the US financial system.<h3 id="8959c97e-7efe-42f8-a1a3-3fa362c5ac51">Geopolitical tensions</h3>Gold is <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/gold-safe-haven-treasurys-us-national-debt-bofa-fiscal-expansion-2024-10">considered a safe haven asset</a> due to its long-standing history as a stable store of value.So when geopolitical tensions rise, investors tend to flock to the shiny metal, and right now, there is no shortage of reasons to be worried.From Russia's war against Ukraine to the escalating clashes in the Middle East to China's long-running threat against Taiwan's independence, geopolitical tensions are rising, not falling.What's more, soaring US debt means that Treasurys—another historical safe haven asset—might not be so risk-free anymore."Gold looks to be the last 'safe haven' asset standing, incentivising traders including central banks to increase exposure," <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/gold-safe-haven-treasurys-us-national-debt-bofa-fiscal-expansion-2024-10">Bank of America said</a> in a note this month. <h3 id="29ec9208-7951-47bd-89c8-75f2d6320ca9">The Trump trade</h3>The <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/donald-trump-trade-rally-betting-markets-kamala-harris-bitcoin-djt-2024-10">Trump trade has picked up steam recently</a> as the former president's odds of winning the election have risen, and gold has been a big beneficiary.That's because a potential Trump presidency is expected to be accompanied by a soaring government deficit and a fast-growing pile of debt, which would further drive concerns about a rebound in inflation and the sustainability of the US dollar."If you're worried about fiscal profligacy, financial repression, and attacks on Fed independence, gold would be an attractive asset," economist Davix Oxley of Capital Economics said on Friday.Even if Trump doesn't win the election, the deficit is likely to grow, setting gold up well for more gains, according to Interactive Brokers chief strategist Steve Sosnick."It's not as though either candidate is preaching fiscal discipline, and the Fed seems willing to keep cutting even if inflation remains a bit above target. So there is a thought that gold could be a viable alternative if rates rise and the economy remains sound. And if the economy isn't sound it could still be a good store of value," Sosnick told Business Insider."<h3 id="dadb04c2-defd-4fe4-a269-2b48d277b4de">Interest rates</h3>According to data from the World Gold Council, falling interest rates have historically benefited gold prices, with the commodity rising as much as 10% in the six months after the Federal Reserve's first rate cut.With the Fed expected to cut interest rates multiple times over the next year, lower rates should serve as a tailwind for gold prices.While interest rates<a target="_blank" class="" href="https://www.businessinsider.com/mortgage-rate-increase-since-federal-reserve-cut-interest-rates-housing-2024-10"> actually jumped since the Fed's first rate cut</a> last month, with the 10-year Treasury yield hitting its highest level since July this week, gold prices have continued to rise.That's a sign that gold investors are more focused on the global interest-rate path, which is pointing lower as global central banks look poised to loosen monetary policy.The People's Bank of China cut rates by 25 basis points this week, while the Bank of Canada cut by 50 basis points. The European Central lowered rates by 25 basis points last week, and economists say they see the Bank of England <a target="_blank" class="" href="https://www.cnbc.com/2024/10/22/why-economists-see-the-uk-cutting-interest-rates-more-substantially.html">set to deliver bigger rate cuts</a> than previously expected by markets.

How gold became one of the world's hottest investments

<ul class="summary-list"><li>JPMorgan and Wells Fargo kick off bank earnings on Friday.</li><li>Expect lots of questions about how lower rates will impact business going forward.</li></ul>When Wall Street's biggest banks report earnings this week, led by JPMorgan Chase, investors will be listening closely for clues about how a changing interest-rate environment could impact business in 2025.The Federal Reserve in September cut the so-called federal funds rate by 50 basis points — <a target="_blank" href="https://markets.businessinsider.com/news/stocks/fed-interest-rate-cut-ai-stocks-nvidia-broadcom-asml-tech-2024-9?_gl=1*1ax8rwf*_ga*MzQwMzI0MDQ1LjE3MjEzMDM4ODI.*_ga_E21CV80ZCZ*MTcyODQ5MTE5OC4yOTAuMS4xNzI4NDkxMjEwLjQ4LjAuMA..">the central bank's first cut</a> in more than four years. The September 18 move took place too late to impact third-quarter results, but stock research analysts are expected to pepper executives this earnings season about what a lower interest-rate environment might mean for business going forward.Lower rates can be a mixed blessing for banks. On the one hand, the Fed's campaign to increase the cost of borrowing has contributed to an era of sky-high returns for traditional lenders like JPMorgan, which have been making more money on loans than they have been paying for deposits. But that party was never going to last forever. (Indeed, top JPMorgan exec <a target="_blank" href="https://www.ft.com/content/c11b59f6-4827-4c4e-9f24-2f075b85f665">Daniel Pinto warned last month</a> that stock analysts' so-called NII expectations were too high.)Plus, lower rates could help unleash <a target="_blank" href="https://www.businessinsider.com/goldman-sachs-2q-earnings-david-solomon-investment-banking-forecast-2024-7">the dealmaking backlog</a> that investment bankers have been talking about since the pandemic-era M&amp;A boom started to slow in 2022. Their bonuses are counting on it.Speaking of bonuses, third-quarter results will also be closely watched on Wall Street as an indication of how well investment bankers may get paid this year.JPMorgan and Wells Fargo will kick off earnings on Friday, followed by Goldman Sachs, Citi, and Bank of America on Tuesday. Morgan Stanley will report its earnings on Wednesday. Here are the top four things to look for this bank earnings season:<h2 id="629d7158-9393-4502-a5a4-b8a898b107c5">Investment banking</h2>Investment bankers have been predicting dealmaking will return since it started slowing in 2022. But this year, there are strong signs that companies are ready to start going public and merging again.<a target="_blank" href="https://www.businessinsider.com/megamergers-deals-m-a-wall-street-comeback-2024-9">Preliminary data compiled by LSEG</a> shows 425 mergers globally so far this year valued at more than $1 billion. That's up 24% from the same period in 2023. What's more, deals valued at greater than $10 billion were recently up 39% compared with the same period last year.The number of companies going public is also soaring. 106 US companies have gone public through the third quarter, raising a total of $24.7 billion, according to IPO tracker Renaissance Capital. That's up from 71 in 2022 and 108 in 2023 and on track to beat the $27 billion raised in those two years.Third-quarter results — and commentary about 4Q dealmaking so far — will be closely watched for further signs of progress in M&amp;A, equity underwriting, and debt underwriting.<h2 id="bf745d80-abee-4488-881c-e8551a17811c">Trading</h2>At the Barclays Financial Services conference in September, big bank executives warned that trading revenues may be muted compared to 2023.Goldman Sachs CEO David Solomon described a "more challenging macro environment, particularly in the month of August," and warned that the bank's trading business "is trending down close to 10%." Solomon cited the bank's revenues for FICC, or fixed-income, currencies and commodities, saying that results were "very, very strong" in the third quarter of 2023.At the same conference, JPMorgan's president and chief operating officer, Daniel Pinto, predicted that trading revenues would be "flat to slightly up 2%." "It was a bit more challenging environment to monetize client flows, particularly in rates," he said.<h2 id="723af9a4-99cc-49fd-b909-2fc736985cbb">Lending</h2>Stock analysts will be watching what banks say about net interest income, which is how much banks earn off the difference between what they pay on deposits and what they earn on loans. When the Fed started raising rates, banks were making out like bandits because they were able to charge more for loans more quickly than they were raising rates on savings accounts.But banks have been warning that this dichotomy wouldn't last forever, and loan growth has indeed been slowing as the economy slows. Lower rates could boost lending yet again, but that could take time. In the meantime, JPMorgan's Pinto in September warned that Wall Street stock analysts' 2025 predictions for NII of between $91.5 billion and $90 billion were too high, sending the bank's stock down."I think that that number will be lower," Pinto said at the Barclays Financial Services conference. "We are not going to guide on that now, but the $90 billion is a bit too high."<h2 id="b126e3af-7e38-4ed0-b6d7-4e67905737f9">Bonuses</h2>Banks tend not to talk about bonuses on earnings calls, but how bankers will be paid will be reflected in C-Suite comments about dealing and trading generally — as well as their predictions for the rest of 2024 and into next year.In good news, compensation expert Johnson Associates sees bonuses up this year across the board, an analysis that's reflective in part of <a target="_blank" href="https://www.osc.ny.gov/press/releases/2024/10/dinapoli-wall-streets-2024-first-half-profits-232b-were-793-higher-last-year">Wall Street's earnings results</a> so far this year. See here for the compensation expert's views on bonuses for debt underwriting, equity underwriting, sales and trading, and more.<div type="image" title="Wall Street bonus predictions" height="630" width="1950" msid="114096916" hostid="261" sizebytes="88820"></div>

4 trends to watch this bank earnings season

<ul class="summary-list"><li>The presidential election has the potential to reshape the investment landscape.</li><li>Detailed below is what Wall Street is saying about investing implications across multiple asset classes.</li></ul>With the presidential election just over a week away, and the candidates in a dead heat in the polls, Americans are in suspense about how their lives will change under a new leader.Business Insider has prepared a five-part refresher for the final stretch that will unpack the potential impact that both Donald Trump and Kamala Harris presidencies will have on US consumers. Today's first installment is focused on the investment landscape.To date, Trump and Harris have outlined specific policy proposals that will impact different parts of the stock market. Their varying platforms will also be crucial in determining the future path of interest rates, which will shape the bond market.But they're not expected to have diametrically opposed impacts on everything, with both candidates seen as positive forces for crypto.Detailed below is the latest research and commentary from top Wall Street strategists, outlining how the market and investing landscape will shift under potential Trump or Harris administrations.The guide covers four specific asset classes, and is divided between the Trump and Harris impact on each.<h2 id="40896f3b-9c3a-42aa-82ae-49a1761381ac">Stocks</h2>From the perspective of equities, it's helpful to look at the potential impact on both the micro (specific sectors set to be impacted) and the macro (how the broader market will respond).<h3 id="24c47698-0ee7-4a48-bb04-abe2a4f630c2">Trump</h3><h4 id="51cc4655-bf14-43bc-b772-b54703215a1c">Sectors</h4>Much of the industry guidance for the stock market under Trump boils down to his proposed tax policies. Bank of America says his plan to cut the corporate tax rate to 15% from 21% will boost corporate earnings by 4%. How much it impacts each sector ultimately depends on sensitivity to changes in the tax rate.To that end, BofA says the consumer discretionary and communication services sectors — the areas most beholden to tax-rate changes — will benefit the most. On the flip side, less exposed areas like utilities, real estate, and energy will get the smallest boost.For energy specifically, Trump's pro-drilling stance — while supportive of industry activity — will likely lead to oversupply and lower oil prices, says BNY Wealth. That, in turn, will hurt corporate profitability in the sector and drag on stock prices.It's also worth noting that energy was the worst-performing sector during Trump's previous presidential tenure.Financials is another area of the stock market seen benefiting from a Trump win. <a target="_blank" rel=" nofollow" class="" href="https://www.reuters.com/markets/us/if-trump-wins-he-plans-free-wall-street-burdensome-regulations-2024-04-12/">Allies of the former president have said</a> he aims to unburden banks from many of the regulations that were imposed following the 2008 financial crisis, something that his first administration tried to do with limited success.Those looser regulations could could also ignite a fresh wave of mergers and acquisitions, which would increase advisory revenue for big banks and help drive up profits from dealmaking.<h4 id="08ac2f7c-0094-48df-8910-ca3b12ae746a">Broader market</h4>Zooming out and assessing the full equity-market landscape, views are divided, particularly along partisan lines. Trump's proposed tax and regulatory policies are seen by his supporters as pro-business, which would be good news for corporate profit growth and deal activity.But Trump critics argue that his proposal for universal tariffs and steeper levies on Chinese imports — as well as a crackdown on immigration — will be inflationary, which could hold back stock prices. The nonpartisan Tax Foundation says the tariff plan in particular could <a target="_blank" class="" href="https://taxfoundation.org/blog/trump-mckinley-tariffs-great-depression/">hurt profit margins and put pressure on consumer spending</a>.Bank of America estimates that 60% tariffs on China and 10% on other countries would lower S&amp;P 500 earnings per share by 3.1%. That would be a problem since earnings growth has long been the stock market's primary driver of gains."The conventional wisdom is wrong: Trump is not going to substantially cut taxes once in office; he is going to raise taxes by jacking up tariffs. To the extent that this dampens economic activity, it is bad news for stocks," BCA Research chief strategist Peter Berezin said.<h3 id="fe116c39-7eef-494d-b923-93e68c7490b4">Harris</h3><h4 id="82c14dd6-d54a-4af0-a6d6-b171c6d4ccd1">Sectors</h4>Just like with Trump, much of the guidance around the stock market under Harris involves her tax plan. Her proposal to hike the corporate tax rate to 28% from 21% would have an inverse effect on sectors.That means consumer discretionary and communication services — the top beneficiaries under Trump — would be hit the hardest under a Harris regime, BofA says."Consumer discretionary stocks have underperformed the S&amp;P 500 modestly since Harris' presidential candidacy was announced, perhaps reflecting concerns that a Democratic President could result in higher corporate taxes and employee wages," BNY Wealth said.Financial firms will also feel a negative impact of both higher taxes and Harris' proposed regulatory tightening.But there are bright spots too. A Harris victory would likely benefit homebuilder stocks because of her proposal to build 3 million houses. Renewable-energy stocks should also see gains due to the favorable view of wind and solar energy by Democrats.Both sectors have outperformed in recent months during periods when Harris saw positive momentum in election polls.<h4 id="27decf30-ab8c-4ed1-beaf-70dfe2073247">Broader market</h4>The stock market <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-today-sp500-hits-another-record-high-q3-earnings-2024-10">has soared to records</a> during Joe Biden's presidency, up more than 50% since he was inaugurated, and a Kamala Harris win would likely be a continuation of many of the same policies that have been supportive of the market.Those include infrastructure investments and tax incentives to bring manufacturing jobs back to the country, like in the semiconductor industry via the CHIPS and Science Act.But BofA says Harris' proposed tax hike would also put downward pressure on corporate profits, which estimates a 5% earnings hit. Beyond that, a quadrupling of the stock buyback tax to 4% would also take 1% off S&amp;P 500 profits, the firm said.With all of these cross-currents swirling, a neutral market outcome must also be assessed.<h3 id="cefe8193-23a0-4521-8119-4d27dde3396d">A potentially muted impact</h3>Capital Economics believes neither a Trump nor Harris win will mean all that much for stock prices because bigger trends — specifically AI — will shape the market's direction."Our upbeat projections for the stock market in 2024 and 2025 are predicated on a view that hype over AI will continue to fuel a stock market bubble," the research firm said. Capital Economics has a 2025 year-end price target of 7,000 for the S&amp;P 500, regardless of which candidate wins the election.Meanwhile, Bank of America said that as long as corporate profits continue to grow, the stock market will <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-election-impact-outlook-harris-trump-energy-tesla-biden-2024-10">rise regardless of who wins</a> the White House.<h2 id="7a7d474f-4301-46c7-a48c-d475d0abd0a4">Bonds</h2>The performance of the US bond market largely hinges on the direction of interest rates.As interest rates rise, bond prices generally fall, and vice versa. And since presidential actions usually impact rates, the bond market will be shaped by what either Trump or Harris end up doing.<h3 id="aa298578-a5d5-4e0a-ab3b-fcb78a88d8dc">Trump</h3>A Trump win would is seen ushering in higher interest rates, which would push bond prices lower. It ultimately boils down to inflation.Economists see Trump's double-whammy proposals of mass deportation and universal tariffs as inflationary. And since the Federal Reserve's primary tool for fighting inflation is raising interest rates, bond prices would suffer as yields rise."Our assessment is that a Trump win would lead to higher US yields," Capital Economics said.Estimates from the <a target="_blank" class="" href="https://www.crfb.org/papers/fiscal-impact-harris-and-trump-campaign-plans">Committee for a Responsible Federal Budget</a> — a non-profit think tank — say a wider deficit and an increasing pile of debt under a Trump presidency, compared to a Harris presidency, would also put upward pressure on interest rates. That would also hurt the performance of bonds.<h3 id="c267d16e-6b3a-4db4-8316-c599ab723494">Harris</h3>Capital Economics said it expects interest rates to fall under a Harris win, which would be good news for bonds, as she wouldn't pursue certain inflationary policies like tariffs or immigration deportations, which could fuel wage inflation.Harris' policies, considered to be less inflationary than Trump's, would also allow the Federal Reserve to continue on their path of cutting interest rates, which would boost bond prices.A Bloomberg survey of institutional investors last month found that 30% of investors would add to their bond exposure if Harris wins, while just 17% said they would buy more bonds if Trump wins.Additionally, 46% of respondents said they would reduce their bond exposure if Trump wins, compared to just 23% under a Harris win.<h2 id="648d1263-465a-44c9-b50e-97ea3cd444a7">Crypto</h2><h3 id="77a393b0-f8c1-49d8-b73b-e2f0119e53e1">Trump</h3>A Trump win is seen as bullish for bitcoin and the broader cryptocurrency industry, as former President Donald Trump has <a target="_blank" class="" href="https://www.businessinsider.com/trump-bitcoin-stance-2024-7?utm_medium=ingest&amp;utm_source=markets">firmly embraced digital assets</a> in recent years.According to Bernstein analyst Gautam Chhugani, <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-90000-target-if-trump-wins-november-election-2024-9">bitcoin could hit $90,000 by December</a> if Trump wins the election, representing potential upside of about 37% from current levels."Elections remain hard to call, but if you are long crypto here, you are likely taking a Trump trade," Chhugani said.<h3 id="58f9bbfb-d544-465f-8607-1b699202db17">Harris</h3>Harris <a target="_blank" class="" href="https://www.businessinsider.com/kamala-harris-donald-trump-crypto-bitcoin-donors-young-men-2024-9">has also embraced the crypto industry</a> in recent months, though she's seen as slightly less bullish compared to Trump, given his public displays of support, including addressing crypto conferences and <a target="_blank" class="" href="https://www.businessinsider.com/trump-nfts-digital-cards-mahattan-trial-2024-5">launching his own NFTs</a>.Yet, Wall Street seems to think that a big case for bitcoin will remain intact no matter who wins. The US government debt pile is expected grow regardless of who controls the White House. That scenario is among bitcoin's biggest bull theses."I'm not sure if either President or other candidate would make a difference. I do believe the utilization of digital assets is going to become more and more of a reality worldwide," BlackRock CEO Larry Fink said during the company's third-quarter earnings call.<h2 id="bb5f6b7e-fd9d-459b-a7dd-22eebbb1993b">US dollar</h2><h3 id="0ae89f53-6e41-467c-8f2a-8aa885fcaf18">Trump</h3>Trump's tax plan and protectionist trade policies are expected to strengthen the dollar. It's <a target="_blank" class="" href="https://www.businessinsider.com/us-dollar-trump-presidential-election-weaker-usd-policy-intervention-trillions-2024-7">the opposite</a> of what the presidential hopeful has said he wants, since a weaker currency makes a nation's exports more competitive in global trade.These policies are expected to be inflationary, which would push interest rates higher and possibly prompt the Fed to tighten. Those climbing rates would then underpin dollar gains."Should he re-take the White House ... the dollar would probably rally sharply, at least in the near term, on expectations of higher US tariffs and interest rates," Capital Economics said in recent research.<h3 id="e5ae53de-b9c3-4069-a7a1-5fc244dc29c6">Harris</h3>A Harris presidency would continue the trends of a weaker dollar due to "policy continuity" of the Biden administration, Capital Economics said.Since Harris' overall platform is less expansionary, it's expected to drive less inflationary pressure, and therefore keep the coast clear for the Fed to cut rates and stimulate the economy as currently planned.That likelihood of lower interest would, in turn, push the dollar lower.

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