The document discusses gold's global trading market. It notes that while the gold market is inherently global and trades continuously, there is no single integrated market due to differences in regulations and standards across countries. The market includes a range of participants such as producers, refiners, banks, and investors. Wholesale trading facilitates price discovery and transactions between buyers and sellers. Market integrity is important to give participants confidence.

1. GOLD’s GLOBAL TRADING
MARKET

2. POINTS TO BE COVERED TODAY:
 Gold’s Global Trading Market
 Gold Market Commentary
 Gold Rebounded As Inflation Concerns Rose And Dollar
Weakened
 Gold Demand Trends Q1 2021
 Historical Gold Prices: 30 BCE to Today

3. Gold’s Global Trading Market
 Despite the size of the gold market, how it is traded is often poorly
understood.
 The gold market is inherently global and gold is traded continuously
throughout all time zones.
 Gold’s disparate trading centres around the world are linked as market
participants drive convergence of local gold prices through arbitrage
activity.
 However, there are still important distinctions across geographies such
as trade restrictions, taxes on gold and differing bar standards such that
a single integrated gold trading market does not exist.
 The gold market comprises a broad range of participants that includes
physical players such as producers, refiners, fabricators and end-users.

4. Gold’s Global Trading Market -I
 Financial intermediaries, such as banks, provide an important function in offering
financing, providing trading liquidity and offering broader services (e.g. selling of gold bars
of consignment).
 Other important players in the wholesale gold market include official institutions and
different types of investor.
 Wholesale gold trading performs an important function in facilitating price discovery and
bringing together buyers and sellers.
 Market participants either seek to trade physical gold, gain exposure to the gold price or
transfer price risk (e.g. by hedging production of gold).
 Ensuring that this activity takes place transparently and fairly is paramount, so that
market participants have confidence in the integrity of their respective gold market.
 The World Gold Council intervenes to ensure all trading markets for gold, and the
infrastructure that supports them, comply with principles of best-practice, such as the UK
Fair & Effective Markets Review, which outlines a broad set of principles covering
standards, transparency, market access and conduct.

5. Inflation, Falling Yields And The US Dollar Pushed Gold
Higher
 The gold price rebounded 4.5% on the month,1 as inflation concerns grew and the
US dollar weakened
 Gold remains down 6% y-t-d, but has moved up closer to the psychologically
important US$1,800/oz level
 Sentiment via COMEX futures increased as net positioning rose 10% off March low
 Outflows in gold ETFs continued, but slowed considerably in April – less than a fifth
of those seen in March
 China gold investment activity was muted in April as reflected in lower local trading
volumes,2 but jewellery demand could receive a boost from postponed weddings
 Surging COVID cases in India are raising concerns that the demand recovery seen
in Q1 will slow
 Swiss gold exports hit 10-month high in March, driven by higher demand in Asia
 Looking forward, we expect inflation concerns and the direction of rates to remain
an important driver of gold prices, while rising COVID cases could weigh on
consumer demand but support investment.

6. Gold Rebounded As Inflation Concerns Rose And
Dollar Weakened
 Marking a turnaround from the first three months of the year, gold rebounded 4.5% in April
to finish the month at US$1,768/oz - its highest monthly closing level since January and its
first positive monthly return since December 2020.
 While gold is still 6% lower y-t-d, its strong April performance was echoed across several
key currencies throughout the month.
 Gold found resistance at US$1,800/oz during the month, suggesting it might need an
additional catalyst to move above that level.
 Sentiment towards gold was positive in the futures market, with net long positioning on
COMEX recovering from the 30 March low (the lowest level since 2019). Net longs grew to
540t (US$31bn), 10% higher in tonnage terms than at the end of March.
 While the move was positive, it might be too early to conclude that it represents a
significant bullish shift given that net positioning remains low compared to recent levels.
 Adding to this, while outflows in gold-backed ETFs continued throughout April, they did so
at a much slower pace as European funds saw net inflows for the first time since January

7. Global Gold-backed ETF Holdings And
Flows
 Gold-backed ETFs and similar products account for a
significant part of the gold market, with institutional and
individual investors using them to implement many of their
investment strategies.
 Flows in ETFs often highlight short-term and long-term
opinions and desires to holding gold.
 The data on this page tracks gold held in physical form by
open-ended ETFs and other products such as close-end
funds, and mutual funds.
 Most funds included in this list are fully backed by physical
gold.

8. Rates Continue To Dominate
 A sharp rise in US interest rates and a stronger dollar have
weighed on gold recently.
 But a rebound in economic activity and a lower gold price
have provided opportunities for consumers and strategic
investors alike.
 Looking forward, we believe that a levelling in interest rates on
the back of accommodative global monetary policies,
combined with rising money supply and further inflationary
pressures, may support gold investment demand.

9. Gold Struggled As Rates Rose
 Following price weakness in the first two months of the year, the gold price extended its decline in
March.
 Gold finished the month 3% lower at US$1,691.1/oz.
 It held above US$1,700/oz for most of the month, before falling back below that level in the final
few days.
 By the end of March, gold was down over 10% y-t-d, its weakest quarterly performance since Q4
2016, and 18% below the record US$2,067/oz achieved in early August 2020.
 Gold’s performance has been similarly weak across major currencies.
 Despite the downward move in price, gold’s one-month implied volatility – reflecting market
expectations of future fluctuations in the price – finished the month close to 14%, well below its
historical realised average of 16% and the average levels seen in 2020.
 This sits in contrast to most risk-on assets, whose volatility tends to increase amid downward price
movements, and highlights the role of gold as an effective risk management tool.

10. Rising Interest Rates Weighed On Gold
Throughout Q1

11. Gold Demand Trends Q1 2021
 Global gold ETF holdings fell by 177.9t (US$9.5bn). Western markets drove outflows as US
rates rose sharply and the US dollar strengthened.
 The US dollar gold price fell by 10% during Q1. The recent downward trend was fuelled in
part by ETF outflows and a reduction in net long positioning in the futures market, but strong
consumer demand helped to provide support.
 Demand for gold bars and coins saw a third successive quarter of growth. Investment in
these products reached 339.5t – the highest quarter since Q4 2016.
 Jewellery demand staged a strong recovery from lockdown-stricken Q1 2020. But it
remained relatively subdued on a historic basis – 6% below the five-year quarterly average of
505.9t.
 Global central bank gold reserves grew 95.5t in Q1. Hungary’s large purchase (+63t)
bolstered Q1 buying, more than matching Turkey’s substantial sale (31.5t).
 Total supply of gold fell 4% y-o-y in Q1. Mine production growth ws outweighed by a fall in
recycling, largely in response to weaker gold prices.

12. Gold Demand Held Steady Despite ETF
Outflows

13. Historical Gold Prices: 30 BCE to
Today
 Gold has been considered precious throughout history,
but it wasn't used for money until around 550 BCE.
 At first, people carried around gold or silver coins. If they
found gold, they could get their government to make
tradable coins out of it.
 Because of its value and its usefulness as currency, the
evolving value of gold can be traced back as far as 30
BCE.

14. Roman Empire
 Emperor Augustus, who reigned in ancient Rome from 31 BCE to
14 CE, set the price of gold at 45 coins to the pound. In other
words, a pound of gold could make 45 coins.
 The next re-evaluation occurred in the period of 211 to 217 CE,
during the reign of Marcus Aurelius Antoninus, who debased the
value to 50 coins for a pound of gold, reducing the value of each
coin and making gold worth more.
 As the price of gold rose, so did the price of everything else.
Middle-class people could not afford their daily needs, and empires
crumbled.

15. Great Britain
 In 1257, Great Britain set the price for an ounce of gold at 0.89 pounds. It raised the
price by about 1 pound each century, as follows:
• 1351: 1.34 pounds
• 1465: 2.01 pounds
• 1546: 3.02 pounds
• 1664: 4.05 pounds
• 1717: 4.25 pounds
 In the 1800s, most countries printed paper currencies that were supported by
their values in gold.
 This was known as the "gold standard." Countries kept enough gold reserves to
support this value.

16. Great Britain- I
 The history of the gold standard in the United States began in 1900.
 The Gold Standard Act established gold as the only metal for redeeming
paper currency.
 It set the value of gold at $20.67 an ounce.
 Great Britain kept gold at 4.25 pounds per ounce until the 1944 Bretton-
Woods Agreement.
 That's when most developed countries agreed to fix their currencies
against the U.S. dollar, because the United States owned 75% of the
world's gold.

17. United States
 Before the Gold Standard Act, the United States used the British gold
standard.
 In 1791, it set the price of gold at $19.49 per ounce but also used silver
to redeem currency.
 In 1834, it raised the price of gold to $20.69 per ounce.
 Defense of the gold standard helped cause the Great Depression.
 A recession began in August 1929 after the Federal Reserve had
raised interest rates in 1928.
 After the 1929 stock market crash, many investors started redeeming
paper currency for its value in gold.

18. United States - I
 The U.S. Treasury worried that the United States might run out of gold.
 It asked the Fed to raise rates again.
 The rise in rates increased the value of the dollar and made it more valuable than gold. This
approach worked in 1931.
 Higher interest rates made loans too expensive, which forced many companies out of
business.
 They also created deflation, since a stronger dollar could buy more with less. Companies cut
costs to keep prices low and remain competitive.
 That further worsened unemployment, which turned the recession into a depression.
 To stem the redemption of gold, President Franklin D. Roosevelt outlawed private ownership
of gold coins, bullion, and certificates in April 1933. Americans had to sell their gold to
the Fed.

19. United States - II
 A year later, Congress passed the Gold Reserve Act. This allowed Roosevelt to raise the price of
gold to $35 per ounce. This lowered the dollar value, creating healthy inflation.
 In 1937, FDR cut government spending to reduce the deficit, which reignited the Depression.
 By that time, the government stockpile of gold tripled to $12 billion. It was held at the U.S. Bullion
Reserves at Fort Knox, Kentucky, and at the Federal Reserve Bank of New York.
 In 1939, FDR increased defense spending to prepare for World War II, and the economy expanded.
At the same time, the Dust Bowl drought ended. This combination ended the Great Depression.
 In 1971, President Nixon told the Fed to stop honoring the dollar's value in gold. That meant foreign
central banks no longer could exchange their dollars for U.S. gold, essentially taking the dollar off
the gold standard. Nixon was trying to end stagflation, a combination of inflation and recession.
 However, inflation was caused by the rising power of the dollar, as it had replaced the British
sterling as a global currency by then.

20. United States - III
 By 1980, traders had bid the price of gold up to $594.92 as a hedge against double-digit
inflation.
 The Fed ended inflation with double-digit interest rates but caused a recession. Gold
dropped to $410 per ounce and remained in that general trading range until 1996, when it
dropped to $288 per ounce in response to steady economic growth.
 Traders returned to gold after each economic crisis, such as the 9/11 terrorist attacks and
the 2001 recession.
 Gold shot up to $869.75 per ounce during the 2008 financial crisis.
 The price of an ounce of gold hit a new high of $1,896.50 in September 2011. Investors
were worried about a U.S. debt default.
 In January 2020, the World Health Organization (WHO) declared the COVID-19 outbreak to
be a global pandemic. By August 7, 2020, gold reached a new all-time record of $2,061.50
an ounce.

21. GOLD’s GLOBAL TRADING
MARKET

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GOLD’s GLOBAL TRADING MARKET