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– Or, lingots
Gold held its own at the CAC 40 this year. Since the beginning of January, the king of precious metals has gained no less than 28%, and the year 2024 is on track to be the best vintage since 2010, when the price of an ounce of gold gained 30% (in dollars ). This enviable performance of gold (especially for a millennial investment renowned as a “good father”) contrasts spectacularly with the disappointing performance of the CAC 40, the flagship equity index of the Paris Stock Exchange having been weighed down this year by the fall of the luxury giants (affected by the sluggishness of the Chinese market, key for the sector, and by a less buoyant dynamic in Europe and the United States) and the French political risk (uncertainties over the government’s economic policy since the elections European), among others…
More recently, while the CAC 40 had finally managed, on September 27, to rise higher than the summer peak, thus emboldening many buyers, the latter quickly became disillusioned, the Paris Stock Exchange having suddenly reversed course. A spectacular backpedal linked to the surge in energy prices (oil and natural gas) against a backdrop of tensions in the Middle East as well as the political cacophony and budgetary issues in France (the Barnier government wants to launch controversial measures and could struggle to convince the European Union of its ability to restore France’s public finances).
Investment: the Fed’s rate cut benefits the price of gold, which once again breaks its record
The CAC 40 is affected by the rise in long-term rates in the United States
But not only that. Indeed, the rise in long-term American rates (favored by statistics showing a certain resilience of economic growth and employment in the United States) is worrying, observes Alexandre Baradez, head of market research at IG France and columnist for Capital. Furthermore, the CAC 40 and Wall Street risk experiencing renewed volatility, as the publication of quarterly accounts of listed companies and the American presidential election in November approach.
Gold benefited from hopes of Fed rate cuts, which could however stall
The price of gold, which generally benefits from a more accommodating monetary policy of central banks, logically benefited in September from reductions in key rates, observes the Comptoir national de l’or. While inflation fell sharply last month in Europe and economic activity remains sluggish (particularly in Germany), the ECB lowered its key rate. For its part, the Fed announced a spectacular 0.5% cut in its key rate on September 18, and signaled other possible cuts by the end of December, against a backdrop of confidence in the trajectory of inflation, underlines the National Gold Counter. Still, the recent surge in energy prices and the relative resilience of the American economy could give rise to future unpleasant surprises on the inflation front, so much so that the Fed could disappoint on the extent of its next cuts key rates. Fears which have weighed somewhat on gold recently, after setting a new historic record in September.
Gold: an investment of choice according to Goldman Sachs, which sees 3 reasons to buy
Gold, a safe haven, benefits from rising geopolitical tensions
Although the trajectory of rates could become less favorable for gold, the barbaric relic nevertheless remains supported by investors looking for safe havens, while a conflagration in the Middle East is not excluded. In this regard, based on 36 major geopolitical events occurring between 1940 and 2022, “gold is one of the best tactical protections against geopolitical risk”, according to JPMorgan. The extension of the Israel-Hamas conflictin Lebanon via Hezbollah, the firing by Iran of more than 200 missiles towards the Jewish state and the uncertainty over the nature and extent of the probable response against Tehran have tipped the Middle East into a new unknown», notes for its part the Comptoir national de l’or.
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