5 minute read

Gold has struck another all-time high – at about US$2,730 per oz. – with prices soaring over 30% this year. This rally comes despite a resilient US economy and still-high government bond yields, factors that typically tarnish gold's appeal.

What's driving the rally?

If the US economy was tumbling toward a recession and falling interest rates were reducing the income of other assets, that could explain gold’s price surge. But those things aren’t happening. Instead, the safe-haven asset is likely shining due to a mix of uncertainties: the upcoming US election, simmering geopolitical risks, and the uncertain pace of global rate cuts.

Major central banks, including the European Central Bank, have been cutting interest rates and the market sees a 99% chance of another US rate cut in November. Declining interest rates lowers the opportunity cost of holding gold, since it doesn't generate yield.

And gold isn't the only precious metal shining bright. Silver is surging, having hit its highest level in nearly 12 years, around US$34 per oz. This broader rally points to increasing investor appetite for safe-haven assets.

What’s the takeaway here?

Historically, a classic portfolio of both stocks and bonds has served investors well, with bonds stepping up when stocks slip. But 2022 was a reminder that when economic growth stalls and inflation spikes, stocks and bonds can both take a hit.

That’s when folks turn to gold – its status as a safe-haven asset attracts investors when other markets struggle. Incorporating gold as part of a broader investment strategy can add a layer of stability to your portfolio and enhance overall returns, especially during turbulent market conditions. In fact, gold has been a key contributor to our portfolios' performance this year.

If you want a ready-made portfolio with exposure to gold, check out General Investing. For a more hands-on approach, our Flexible Portfolios let you invest directly in gold and silver ETFs

📰 In Other News: The Eurozone is lining up a gentle descent

The European Central Bank (ECB) lowered its key interest rate for the third time this year, marking its first back-to-back cut in 13 years. This latest reduction, another quarter-point cut, comes in response to weakening consumer activity, a manufacturing slowdown in Germany, and proposed spending cuts in France.

A central bank's work is never done: after wrestling inflation back under control, the ECB is now grappling with a sluggish economy. With inflation in the Eurozone dipping below the 2% target for the first time in three years, you might expect signs of a steadier ship – but it’s rarely that simple when it comes to regional economics.

To its credit, the ECB's more careful approach shows its commitment to maintaining low and stable inflation, without putting pressure on its economic recovery.

Europe faces its own set of challenges: competitiveness issues, particularly high labour costs, put it at a disadvantage. As ECB President Christine Lagarde emphasised, while the path to a "soft landing" remains the goal, it will require more than just monetary policy adjustments to achieve sustained growth.

These articles were written in collaboration with Finimize.

🎓 Simply Finance: Soft landing

A "soft landing" in economics refers to a slowdown in growth that avoids a recession. It's when central banks enact policies to combat inflation – like increasing interest rates – without causing a sharp downturn. Think of it like a pilot landing a plane: the goal is to slow down and touch down smoothly, without an abrupt stop. This means gradually reducing inflation to more sustainable levels, while maintaining low unemployment and stable markets.

✨ Here’s how our portfolios performed in Q3 2024

Despite some turbulence, the previous quarter ended on a high note for global markets. Our CIO, Stephanie Leung, and CEO, Michele Ferrario, unpack the most significant market trends and share their outlook for the months ahead.

And for a detailed look at each of our portfolios, see our returns article.

🗓️ Save the Date

Join us for the grand finale of our Master Your Finances series, where you'll discover how starting early in your investment journey can transform your financial future. We have a special guest, Dinesh Dayani, Co-Founder of the personal finance publication DollarsAndSense, alongside our Head of Client Experience, Mey, who will break down the essentials of smart investing.

Here’s what we’ll uncover:

• The benefits of starting early and how it can pay off in the long run
• How risk, exposure, and diversification work together in investing
• The power of compounding returns
• How your generation can leverage time and technology to grow wealth

You know it will be a lively and interactive session, so come with your questions! 

Meet us in person at our office! Book your seat today! 

Falling rates? Time to turn them into gains! 💰

With interest rates dropping, now’s the moment to rethink your strategy. Join our webinar on 28 October and learn how to turn market changes into your advantage.

Our experts, Dr Janet Liu (VP of Investment Advisory) and Justin Jimenez (Head of Macro and Investment Research) will guide you through actionable insights to protect and grow your wealth as market conditions shift.