Investors are allocating most to gold since 2012

JPMorgan analysts say investment in the precious metal has risen in the past year.

Gold investment has risen over the past year, driven by central bank purchases, with overall implied allocations by non-bank investors at the highest since end-2012, JPMorgan Chase & Co. analysts including Nikolaos Panigirtzoglou said in a note.

The implied allocation to gold has been rising since the pandemic and looks rather high by historical standards
- “One needs to assume a structural increase in central bank demand beyond historical norms (due to fears of sanctions or general diversification away from G7 government bonds) to be bullish on gold”
- But that’s being challenged at the moment as there’s evidence of a normalization of central bank gold purchases in Q2 2023 and it remains to be seen if this is temporary or not
There’s little doubt the pace of central bank buying is now most important factor for gauging the future trajectory of gold prices
- It’s taken over from ETF flows, which were the most important before the pandemic