Technically and fundamentally gold started poorly this year. Fundamentally, there are two reasons for the changes. First, we noted late last year, growth in real global interest rates. Gold is generally correlated inversely to real interest rates. Higher inflation returns increase the likely cost of storing gold, which, after all, is only an asset to the lack of component revenue.
Another factor is that investors are gradually seeing the end of the game with abundant liquidity, which supported the gold in the last few years. While all this may not be an argument for the U.S., which pass through the second round of quantitative easing, of course, this is true for many emerging markets, despite the fact that expectations regarding the possible interest rates have also changed as the Bank of England, and from the ECB this year.
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