Know your Holdings: 1nvest Gold ETF

Gold has, over the years, been one of the most used commodities, employed in various fields, from the manufacture of today's technologies to the storage of wealth amid financial turbulence. Gold-backed instruments, such as ETFs (Exchange Traded Funds), provide a way for investors to seek exposure to the value of the yellow metal without the hassle of concerns about storage and security.

The 1nvest Gold ETF is and exchange-traded fund that's entirely backed by real gold, securely stored and insured in protected vaults. The gold is in the form of standardized bars (1/100 troy ounce) and is kept separately, identified, and allocated in secure vaults. 1nvest ETF cannot add external risks, like leasing precious metals. Each unit of the gold ETF represents a specific amount of gold, known as the metal entitlement factor.

Disclaimer: The holdings may not be limited to the logos on the image and may change. The use of logos are for educational purposes only.

Factors that influence gold prices.

Various factors influence gold prices, making it a dynamic commodity in financial markets. Key factors include:

• US Dollar Strength: Gold prices often move inversely to the US Dollar. A stronger dollar can suppress gold prices, as it makes the metal more expensive for investors holding other currencies.
• Interest Rates and Monetary Policy: Changes in interest rates and monetary policy decisions, especially those by central banks like the Federal Reserve, can impact gold prices. Higher interest rates may lower gold demand as it doesn't earn interest or dividends.
• Inflation and Deflation: Gold is considered a hedge against inflation. When inflation is high, investors may turn to gold to preserve wealth. Conversely, during deflationary periods, gold prices may face downward pressure.
• Global Economic Conditions: Economic uncertainties or downturns often drive investors towards gold as a safe-haven asset. Geopolitical tensions, trade disputes, and financial crises can boost gold demand.
• Supply and Demand Dynamics: Changes in gold mining production, exploration, and overall supply and demand conditions influence prices. A decrease in mining output or an increase in demand can lead to higher prices.

If you want to learn more about gold, how its value is created, and its history, here’s a document from the World Gold Council that delves into the precious metal in depth. 

What's Driving Gold Prices?

Looking into what’s driving the value of gold as of writing, on Thursday, 16 November 2023, the gold price rose above $1,960 due to increased demand, driven by a decline in US Treasury bond yields. Adding to this, the current geopolitical events in the Middle East are also contributing to the rise in the commodity price. Factors such as the recovery of the US Dollar and uncertainty about the US Federal Reserve's interest rate outlook are, in contrast, contributing to limiting the gold price rebound to above $2,000.

The direction of interest rates by policymakers is determined by data that includes the CPI (Consumer Price Index). The US CPI data was also released during the week, where an article for BusinessDayLive showed how the annual rise in the Consumer Price Index cooled more than expected. The continuation of the cooling of CPI could potentially lead to slower rate hikes or a cut in rates. This could be a positive tone for Gold if rates remain unchanged or are cut.

When investing in gold, it’s always important to take into account U.S. and major economy data on jobs, as well as speeches from Fed policymakers for further market direction. Additionally, consider geopolitical events that could also contribute to the volatility in gold.

The 1nvest Gold ETF is available in the ZAR wallet, allowing investors to invest any amount to either buy a fraction, or a full unit.