Morgan Stanley's Amy Gower on Gold Market
Summary
- Gold initially pulled back on recent conflict shock due to its high liquidity, as investors sell to free up cash for margin calls or reallocation, similar to patterns seen in COVID and Russia-Ukraine war onset.
- Technical factors provided support, with gold bouncing off the 200-day moving average, indicating some technical selling.
- Shift in Fed pricing from rate cuts to hikes and a strengthening dollar are near-term headwinds for gold, reversing last year's unusual safe-haven demand with a weakening dollar.
- Long-term narrative for gold as a real asset and hedge against fiat currency debasement remains intact, driven by investor demand for alternatives.
- ETF demand for gold is highly sensitive to Fed actions; ETFs bought nearly as much as central banks in 2025 but zero in 2024, risking liquidation if Fed turns hawkish.
- Central bank gold buying slowed from 860 tons last year; Turkey sold 60 tons, and Poland (largest buyer in 2023) may shift to active management, potentially weighing on prices.
- Aluminum outperforms base metals due to Middle East supply disruptions (9% of production), but growth worries are now tempering price support and regional premiums.
- Copper shows encouraging signs in China with inventories pulling back faster than normal and physical premiums jumping, suggesting dip-buying and underlying demand.
- Current supply chains are not overstocked like in 2022, reducing risk of a severe demand shock; vulnerabilities could prompt a restocking cycle once stability returns, influenced by interest rates.
- Stockpiling of commodities likely to increase by 2027 at both government and company levels due to supply chain awareness and financing costs.
Trade Ideas
Speaker stated that ETF demand for gold is sensitive to Fed actions, with ETFs flipping between buying and selling; central bank buying has slowed, and Turkey sold 60 tons. Near-term pressures from Fed rate hike expectations and dollar strength contrast with long-term real asset narrative, creating a balanced but uncertain outlook. WATCH due to conflicting short-term headwinds and long-term supportive factors, requiring monitoring of Fed policy and central bank activity. Fed turning more dovish or central bank buying resuming strongly could boost gold; conversely, aggressive hikes or sustained selling could pressure it further.
Speaker noted aluminum initially rallied due to Middle East supply disruptions (9% of production), but growth worries are now causing a pullback, though it still outperforms other base metals. Supply risks from regional export disruptions and raw material dependencies are balanced against demand concerns, leading to volatile price action. WATCH as aluminum faces push-pull factors between supply constraints and macroeconomic growth fears, requiring close observation of both geophysical and demand data. Resolution of Middle East conflicts easing supply, or a significant global growth slowdown reducing demand.
Speaker observed copper inventories in China pulling back faster than normal and physical premiums jumping, indicating potential dip-buying. Strong physical demand signals in China suggest underlying support, but broader economic conditions could influence future trends. WATCH for sustained demand indicators in China and global growth impacts, as current data points to resilience but is not conclusive. Broader economic slowdown in China or other key markets undermining demand.
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This Bloomberg Markets video, published March 30, 2026, features Amy Gower discussing GOLD, JJU, COPPER. 3 trade ideas extracted by AI with direction and confidence scoring.