1911 Gold Corporation (TSXV: AUMB; OTCQX: AUMBF)
1911 Gold is Manitoba’s Gold Standard - Ready, Permitted and High-Grade 1911 Gold is an Emerging Gold Producer, with Significant Cash Flow Generation and District-Scale Growth Potential
Gold prices suffered their steepest drop in a month this week, sliding as much as 3% to around $5,015 an ounce. The trigger: a stronger dollar and mounting bets on higher for-longer US interest rates. Yet beneath the surface, investor appetite for the metal tells a different story. Global physically backed gold ETFs saw $5.3 billion pour in during February—the ninth straight month of inflows and the strongest start to a year on record.
The immediate pressure on bullion comes from two directions: a climbing dollar and shifting inflation expectations tied to surging oil prices. As Middle East tensions escalate, Persian Gulf producers have cut output, sending Brent crude briefly toward $120 a barrel. That spike has reignited fears of sticky US inflation, reinforcing expectations that the Federal Reserve will keep rates elevated—or hike again.
For a non-yielding asset like gold, higher borrowing costs and a stronger dollar are a toxic mix. Adding to the pain: in periods of equity market turbulence, some investors have sold bullion to raise cash for margin calls. “During geopolitical stress, investors sometimes sell gold to raise cash,” said Christopher Wong, strategist at Oversea-Chinese Banking Corp. “Once that phase passes, uncertainty typically supports safe-haven buying on dips.”
The World Gold Council’s latest data underscores the divergence: February marked the ninth consecutive month of inflows, pushing total holdings to 4,171 tons. Assets under management hit a record $701 billion.
North America led the charge with $4.7 billion in inflows, extending a nine-month streak. Asia added another $2.3 billion, driven by Japanese investors navigating political uncertainty and a weak yen. Europe was the sole laggard, with $1.8 billion in outflows—though flows turned positive late in the month, suggesting no structural shift.
Joe Cavatoni, Senior Market Strategist at the World Gold Council, sees the price retreat and sustained inflows as signs of a maturing market. Annualized volatility in gold has climbed to 25%-30%, well above the historical norm of 15%. But Cavatoni argues that’s not a red flag—it reflects deeper engagement. More investors are participating, momentum is building, and gold’s price swings are increasingly in sync with other risk assets.
“Don’t overinterpret short-term moves,” he said. In a world brimming with uncertainty, gold’s long-term uptrend remains intact. What bears watching, he added, are structural disruptions—like transport bottlenecks or market infrastructure cracks—that could introduce unpredictable shocks.
While official sector purchases have moderated from recent peaks, they continue to provide a floor. The People’s Bank of China added to its reserves for the 16th consecutive month in February, underscoring gold’s strategic appeal.
Marex analyst Ed Meir notes that geopolitical outcomes will determine the next leg. A swift resolution could weaken the dollar and lift gold; a protracted conflict would likely boost the dollar and yields on inflation expectations. His advice for now? “There is a time to buy, a time to sell and a time to simply wait. The latter is the preferred course of action.”
For now, gold remains caught between near-term headwinds—a strong dollar and sticky rates—and long-term tailwinds: central bank demand, ETF flows, and geopolitical risk. The market is waiting for a catalyst to break the deadlock.
