If it's late August, then you've probably got your eyes trained on Jackson Hole. And why not, with those magnificent mountain vistas?
And let's not forget those central bank officials gadding about the place.
Gold holders, especially, will be focused on Federal Reserve Chair Janet Yellen's speech on Friday at the annual economic symposium and, in particular, any Delphic hints of what's next for interest rates. This makes sense, but there's an equally important story playing out in gold across the globe.
Gold investors like the metal for any number of reasons, but they usually boil down to its scarcity and safe-haven properties. Everyone else likes it because, you know, it looks nice and feels pleasingly weighty. That broad, transcendent appeal is one of the gold market's biggest strengths.
Lately, though, it's been all about the investors, as the pleasingly-weighty crowd have held back.
That sudden expansion in the red bit of the bars above is why gold reversed its decline so sharply this year. A stew of renewed economic fears and the descent of bond yields into Minus Land have reinvigorated investor demand -- particularly for gold-backed exchange traded funds.
Gold prices hit their all-time peak in 2011, which also happens to be the last time jewelry demand was languishing at less than 50 percent of the market. Jewelry demand rebounded after that, as ETF demand went into reverse and made bling more affordable -- by 2014, jewelry demand in absolute terms had gotten back to pre-crisis levels. But the gold-price rally this year, as investors have piled back in, appears to have put off the bauble buyers again.
Three of the biggest markets for gold jewelry are China, India and the Middle East, accounting for 71 percent of demand last year. They've definitely lost their appetite recently.
Demand really fell off a cliff in the Middle East and India. The former's woes all stem from the extended collapse in oil prices. India's, meanwhile, have been exacerbated by its weaker currency.
What's interesting is that it isn't just jewelry demand that's down in these regions; demand for gold coins and bars as investments has also fallen, by 12 percent in the second quarter versus a year ago, according to data from the World Gold Council.
It looks like $1,300 an ounce could be a threshold beyond which many jewelry buyers just refuse to step these days. That makes the current rally dependent on continuing flows into gold-linked financial products. Apart from physical gold ETFs, speculative longs in futures and options have spiked.
Looking at that chart, and with the world's biggest jewelry fans taking a break, you have to ask yourself where the marginal buyer is going to come from. The right formula of words from Yellen's lips on Friday could coax them out. Equally, though, the Fed chair's musings might send those chasing the recent momentum into reverse. If your eyes are trained on Jackson Hole, focus less on the peaks, more on the valley.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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