Gold rises $30 to test the December high but XAU/JPY tells the story

Gold was a solid place to camp out in a rough global market in 2022. It’s trading at $1815 at the moment, which is just a shade below the Dec 31, 2021 closing level of $1829. Compare that to stocks, bonds or crypto and it’s a big win but what gets overlooked is how well gold did in non-USD terms.

The dollar was easily the best-performing major currency this year and so non-USD investors did particularly well holding gold.

Given the rip in the yen today, XAU/JPY is a interesting chart and shows just how well gold has done. It went parabolic in Q1 to hit an all time high above ¥250,000 yen per ounce.

With today’s fall, it’s down to ¥238,000 but remains well-above the ¥210,000 opening level.

I’m going to keep this chart on my radar for the next few months because it’s failed to break ¥250,000 but it’s also consolidated into a bull flag with support down to ¥231,000/oz.

On the fundamental side, the US confiscation of Russian currency reserves is a factor that should be a tailwind for gold for decades. The era of sovereigns piling into USD reserves isn’t over but it’s crested and the marginal dollar may now find its way into gold. Central bank buying in Q3 data was strong and I expect more of the same in Q4.

Combine that with the 2023 peak in global central bank rates along, a looming eurozone debt crisis, the crypto crash and plenty of elements are in place for a long-term bull market. The ebb and flow of inflation and currency fluctuations are going to add more volatility this year but for 2022 it’s safe to say that gold is one of the few safe haven assets that passed the test.