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LivestreamMenuGold investors are set for further volatility ahead, but the precious yellow metal is on an upward trajectory in the long-term, according to market veteran Jeff Currie. The strategist has switched his positioning on gold from short to long in recent months for one key reason: the resilience of central bank demand. An enormous rally in bullion since 2022 has been largely fueled by “insatiable” demand from central banks, particularly those in emerging markets such as China, Turkey, India and Poland. In turn, a pivot by many countries to selling their gold earlier this year contributed to the yellow metal’s worst quarter in 13 years across the three months to the end of June. XAU= 5Y line Gold spot price. Currie, chief strategy officer at Altis Partners and senior advisor at private equity giant Carlyle, told CNBC’s “Squawk Box Europe” on Monday that the dynamics behind the sell-off were “transient.” “You sell what you can, not what you want to,” he said. “If we go back to the situation when the [Strait of Hormuz blockade] began, you saw the inability of the Middle East countries to be able to export oil or raise cash from that. If you can’t raise cash from that, you’re going to sell gold.” “That combined with emerging markets who have opposite problem, they had to raise cash to buy oil… they had to sell the gold to raise that. Both of those dynamics are transient,” he said. But over the longer term, Currie sees central bank demand for gold driven by a desire to diversify their reserves away from assets that could be frozen by another country or be subject to sanctions. Major fiat currencies such as the U.S. dollar, another conventional reserve asset for central banks, have weaker and more uncertain prospects than gold, he said. A survey released in June by the World Gold Council showed central banks are increasingly storing their bullion reserves at home as they eye geopolitical tensions and renewed inflation risks. “If you’re looking at a way to protect yourself from any type of sanction risk or somebody messing with your reserves, gold is your safest bet,” Currie said Monday. Acknowledging that gold, silver and other hard assets would likely continue to see elevated volatility, Currie added: “You’ll see spikes across all these commodities, but the spike is higher and the low is higher.”Read More
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