Western Investors Flip-Flop on Gold, Become Bull Market Price Setters

Jan Nieuwenhuijs, a seasoned gold market analyst, has observed a change in gold purchasing flows, stating that while the East previously drove prices up, Western investors are now in charge of pushing the gold market to new heights. However, a ‘perfect storm’ for gold prices might ensue if the East starts buying again.

Western Investors Start Driving Gold Prices, New Highs Might Ensue if East Rejoins

The unprecedented increase in gold prices, having reached new all-time highs, is taking analysts to study which market movements are driving this trend. While earlier analysis pointed at East-originated demand and central bank buying as the main culprits behind this bull market, this has changed now, revealing new actors behind this phenomenon.

Jan Nieuwenhuijs, a seasoned gold market analyst, recently stated that Western investors had flip-flopped on their policy toward gold, becoming the main buying source supporting the precious metal’s new record prices.

As proof of his allegations, Nieuwenhuijs points out that since last June, gold exchange-traded fund (ETF) inventories have increased, and the U.K., one of the largest gold bullion markets, has become a net importer.

But even more relevant, gold prices have uncoupled with the 10-year Treasury Inflation Protected Securities (TIPS) yields. On how this is related to a flip-flop in gold purchasing policies by Western investors, Nieuwenhuijs explained:

Whenever the West pegs the gold price to the TIPS yield, it enters the market mostly for speculative reasons. Now, Western investors have shifted from this model, and the gold price is going up.

For him, this means that these investors are now focusing on gold as an insurance and safe haven, instead of as a speculative trading vehicle. Nonetheless, even when the West is now punching the gold bull market, Nieuwenhuijs believes the East can also restart its buying spree, as the reasons behind it are still present and relevant. A “perfect storm” for precious metals prices might ensue if the two hemispheres present constant demand.

Zeal Intelligence founder Adam Hamilton predicted that the West, which had previously ignored the gold bull market, would re-enter this market after the Wall Street and artificial intelligence (AI) bubbles burst.