Amanze Chinonye
As the standout trade of the year, Gold has been described by analysts as being “too hot to chase and “too hot to short.”
In an exchange with Prime Business Africa Thursday morning, Ahmad Assiri, the research strategist at Pepperstone, says the consistent good performance of Gold in the investment market this year is majorly driven by emerging market central banks gradually increasing their gold reserves as a percentage of total reserves.
This shift, he argues, is largely due to the US dollar’s 10% year-to-date decline in purchasing power and growing policy uncertainty.
The Federal Reserve’s anticipated easing cycle, despite potentially moving ahead of data beyond the September FOMC meeting, further supports gold’s appeal, Assiri concludes.
Prime Business Africa reports that low correlations, new global financial regime, central bank buying, geopolitical uncertainty and inflation concerns are key factors driving Gold’s rise, as its performance is now less correlated with the S&P 500 and fixed income, making it a true diversifier for multi-asset portfolios.
Unlike the post-GFC to Covid era, the current regime is characterized by a steady re-accumulation of gold led by central banks, with gold gaining over 100% since 2022 and outperforming the S&P 500.
Continued gold purchases by central banks provide a solid foundation for prices.
Geopolitical Uncertainty:
Ongoing conflicts and tensions drive investors towards safe-haven assets like gold.
Inflation Concerns: Gold’s value as an inflation hedge becomes more apparent during economic uncertainty.
Tactical Positioning:
Given gold’s recent double-digit gains, a new consolidation range is likely needed. “With the Fed’s easing cycle largely priced in, pullbacks have been limited, and strong buying flows make gold too hot to short, ” Assiri tells Prime Business Africa Thursday morning.
“Possible levels below $3,600 could offer a cleaner entry range as stretched positioning washes out.”
Current Market Situation:
As of September 10, 2025, gold is trading at $3,631.82, with a 0.24% decrease from the previous close. The market is closely watching the upcoming economic data and Fed decisions for direction.
Investment Strategies:
Investors can gain exposure to gold through various means, including:
– Physical Gold: Buying gold coins or bars.
– Gold ETFs: Exchange-traded funds tracking gold prices.
– Gold Mining Stocks: Investing in companies involved in gold mining.
– Futures Contracts: Trading gold futures contracts.
Prime Business Africa believes that, given the current market dynamics, it’s essential to consider a diversified investment approach and consult with a financial advisor to assess individual risk tolerance and investment goals.
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