Gold Market Analysis

Market Snapshot: June 2023

Gold has shown resilience in the face of economic uncertainties, with prices hovering around $1,950 per ounce. The precious metal continues to benefit from its status as a safe-haven asset amid ongoing global economic challenges, including persistent inflation concerns and geopolitical tensions.

Key market indicators:

Indicator	Current Value	Monthly Change	Trend
Gold Spot Price (USD/oz)	$1,950.30	+2.3%	↑ Bullish
Gold Futures (Aug 2023)	$1,965.80	+2.1%	↑ Bullish
Gold/Silver Ratio	82.5	-1.2%	→ Neutral
Gold Mining Index (GDX)	$32.45	+3.7%	↑ Bullish
US Dollar Index (DXY)	102.8	-0.8%	↑ Bullish for Gold
10-Year Treasury Yield	3.72%	-0.15%	↑ Bullish for Gold

Macroeconomic Factors

Several macroeconomic factors continue to influence gold prices:

Inflation Dynamics

While inflation has moderated from peak levels, it remains above central bank targets in many economies. The persistence of above-target inflation continues to support gold as an inflation hedge. Recent Consumer Price Index (CPI) data shows annual inflation at 4.0% in the United States, down from earlier peaks but still above the Federal Reserve's 2% target.

Interest Rate Environment

Central banks globally are approaching the end of their tightening cycles. The Federal Reserve has signaled a potential pause in rate hikes, which is typically supportive for gold prices. Markets are currently pricing in one more 25 basis point hike in 2023, followed by potential rate cuts in 2024 if economic conditions deteriorate.

Currency Movements

The US dollar has shown signs of weakening against major currencies, providing support for gold prices. The Dollar Index (DXY) has declined by approximately 3% since its March 2023 peak, creating a more favorable environment for dollar-denominated gold prices.

Geopolitical Landscape

Geopolitical tensions continue to provide support for gold as a safe-haven asset:

Ongoing Conflicts

The continuation of major international conflicts has maintained a risk premium in gold prices. These situations have disrupted global supply chains and created economic uncertainties that typically benefit safe-haven assets like gold.

Banking Sector Concerns

Recent instability in the banking sector, particularly among regional banks in developed markets, has heightened concerns about financial system stability. These concerns have driven increased interest in gold as a portfolio diversifier and store of value outside the banking system.

De-dollarization Trends

Several countries have accelerated efforts to reduce dependence on the US dollar in international trade and reserves, with some increasing their gold holdings as an alternative reserve asset. Central bank gold purchases reached record levels in 2022 and have continued at a robust pace in 2023.

Supply and Demand Fundamentals

Mining Production

Global gold mining production has remained relatively stable, with modest growth of approximately 1-2% expected in 2023. However, declining ore grades and increasing production costs at many mines may constrain supply growth in the medium term. The average all-in sustaining cost (AISC) for gold miners has increased to approximately $1,250 per ounce, reducing profit margins at current prices.

Investment Demand

Gold ETF holdings have stabilized after significant outflows in 2022, with modest inflows observed in recent months. Physical gold demand for bars and coins remains strong, particularly in Asian markets. Retail investor interest has increased amid banking sector concerns and persistent inflation.

Central Bank Purchases

Central banks continue to be significant buyers in the gold market, with net purchases of approximately 228 tonnes in Q1 2023, maintaining the strong pace seen in 2022. Notable buyers include China, Turkey, and several emerging market central banks seeking to diversify reserves away from traditional currencies.

Jewelry Demand

Jewelry demand has shown signs of recovery, particularly in India and China, the world's largest gold jewelry markets. Indian gold demand has benefited from a good monsoon season and wedding season purchases, while Chinese demand has been supported by the reopening of the economy following COVID-19 restrictions.

Portfolio Allocation Strategies

Based on our market analysis, we recommend the following allocation strategies for different investor profiles:

Conservative Investors

Maintain a 5-10% allocation to gold as a portfolio stabilizer and inflation hedge. Focus on physical gold and gold ETFs for simplicity and liquidity. Consider dollar-cost averaging to build positions gradually.

Moderate Investors

Consider a 10-15% allocation to gold and gold-related investments. Diversify across physical gold, ETFs, and select large-cap mining companies with strong production profiles and healthy balance sheets. Look for miners with all-in sustaining costs below $1,100 per ounce for margin protection.

Growth-Oriented Investors

Explore a more diversified approach with 15-20% allocation across the gold spectrum. Include exposure to mid-tier producers, royalty/streaming companies, and select exploration companies with proven management teams and promising projects in stable jurisdictions.

Timing Considerations

While we maintain a positive outlook for gold, investors should consider the following timing factors:

• Seasonal patterns typically show weakness in the summer months (June-July) followed by strength in late summer through fall (August-October)
• Gold often experiences short-term volatility around Federal Reserve meetings and key economic data releases
• Consider implementing a systematic buying program to average into positions rather than making large one-time investments
• Watch for potential short-term corrections as opportunities to increase allocations

Hammad Gold Investment Investment Opportunities

At Hammad Gold Investment, we offer several investment options aligned with our market outlook:

Physical Gold Ownership Program

Our secure storage solutions allow investors to own allocated physical gold without the security concerns of home storage. We offer competitive premiums and a transparent fee structure, with the ability to take physical delivery or liquidate holdings at any time.

Gold Savings Plans

Our systematic investment plans enable investors to build gold positions through regular monthly contributions, implementing a dollar-cost averaging strategy automatically. Plans start from as little as $100 per month.

Premium Investment Packages

For larger investors, our premium packages offer enhanced returns through a combination of physical gold ownership and exposure to carefully selected mining operations. These packages are designed to provide both capital preservation and growth potential.

To discuss how these investment options can be tailored to your specific needs and market outlook, please contact our investment advisors.