It is not uncommon for financial markets to correct during the summer. The last notable episode of its kind was undoubtedly the stock market correction caused by the devaluation of the Renminbi on 11 August 2015. This event took the market somewhat by surprise.

The price of gold has risen significantly in US dollar terms, and often even more in other currencies. From mid-2022 onwards, many investors were surprised that the price of gold moved up while US real rates also increased. Historically, gold performed well when US real rates (nominal rates minus inflation) fell, and vice versa. So, why has the correlation between gold and US real rates changed? Why has gold performed so well when real yields rose?

For this mid-year outlook, we break down our findings into two key themes: a long-term view of the future, and the more near-term influences of the business cycle. This dual focus helps to shape our strategic positioning and clarifies investment perspectives for the year.