JPMorgan Analysts Flag 4% Gold Slump and 2.6% EM Carry Rebound
JPMorgan analysts said new investment interest in precious metals dried to a trickle as gold traded near $4,540 an ounce after a 4% weekly decline, with inflation fears keeping rates elevated. Their emerging-market carry trade index has jumped 2.6% from its March low and 1.2% since late February.
1. Precious Metals Demand Plummets
JPMorgan Chase analysts report that investment interest in gold and silver has evaporated as inflation concerns and expectations of higher interest rates weigh on bullion demand. Gold held around $4,540 an ounce after a 4% weekly drop and has fallen 14% since the Strait of Hormuz conflict began, while silver imports into India slowed amid tighter duties.
2. Emerging-Market Carry Trade Rebounds
Their emerging-market carry trade index, which measures returns from borrowing in yen, Swiss franc and yuan to invest in higher-yielding currencies, has climbed 2.6% from its March low and 1.2% since late February. The rally is underpinned by surging crude oil prices that support elevated real rates and by subdued EM currency volatility near 7%, down from over 9% in mid-March.