The 70th edition of VicenzaOro, which took place from 19 to 23 January 2024, reconfrmed that it is the most important international gold and jewellery event and was an opportunity for Intesa Sanpaolo to meet clients from the gold districts. The IMI Corporate & Investment Banking Division of Intesa Sanpaolo plays the important role of raw material intermediary within the production chain.
According to Intesa Sanpaolo's Research Department, 2023 was a very volatile year for precious metals, as unexpected crises (the banking crisis in March, the Hamas attack on Israel in October) triggered strong price rallies and pushed gold to new records. The year 2024 also opened with much volatility and strong rises in gold. The question now is whether the precious metal will set new records in the coming months, after having broken through the $2,400 an ounce mark for the first time in April 2024, or whether it will lose momentum and return below $2,000.
NEW ALL-TIME RECORDS EXPECTED FOR GOLD
We believe that, in light of the macroeconomic outlook and the significant geopolitical risks facing the world economy, 2024 can be a good year for precious metals as a combination of favourable conditions should support gold set to achieve new all-time records. Among the most important factors are: the recent asymmetry in the correlation between gold and US real rates, which should favour gold due to the expected transition in monetary regimes from the exceptionally rapid and severe tightening of 2022-2023 to a gradual and data-dependent easing; a likely weaker US dollar; persistent geopolitical risks, fuelling demand for safe-haven assets and periodically reviving concerns about slowdown risks related to disruptions in trade flows and negative impacts on business confidence; a strong appetite for gold from both central banks and consumers, especially in emerging markets.
Furthermore, with reference to the Italian gold sector, the fifth edition of the economic survey carried out by the Intesa Sanpaolo’s Research Department in cooperation with the Goldsmiths' Club was presented. Statistics and surveys confirm that the sector has held up well over the past year: compared to the survey carried out in June, the percentage of operators declaring a growing turnover has increased. This is also confirmed by official ISTAT statistics that show a 7.4% growth in 2023, better than the fashion industry (+1.7%) and total manufacturing (-0.9%). International markets continue to play a central role in the sector's growth: in 2023, despite a context of stable world demand (+0.2% in quantity), Italian gold jewellery exports amounted to 9.2 billion euros, up +12.1% in value and 4.2% in quantity. Among the main markets, there was significant growth towards Switzerland, which, thanks to a 34% leap, became the first market for Italian exports, followed by the United States where, however, Italian sales achieved +4.7%. Good ability of the sector to capture even higher demand from Turkey and China.
GROWING TURNOVER FOR MEDIUM/LARGE COMPANIES
For 2024, operators' expectations are more cautious, especially for smaller companies, while for medium/large companies about 50% expect turnover to grow.
Industry players believe that price will be the determining factor in the coming years. Expectations are for a rising price, but everyone's wish is for price volatility to be reduced, as sudden price movements lead to order blockages and the risk of exchange losses. Hence the common intention of the IMI CIB Division and its clients to increase the use of financial instruments that neutralise the risks of price fluctuations.
The IMI CIB Division, which has always been close to its clients, is witnessing a continuous and progressive change in the commercial proposition, which was previously oriented towards an essential product dropped on markets with high order absorption and modest margins (such as the United Arab Emirates), now directed towards the search for quality, beauty and the object to be purchased in the various stages of life.
In this context in which target markets increase and sometimes change their skins, the solutions offered by IMI CIB to companies are very varied and range from the sale of physical gold, to gold loans as well as financial hedging transactions for those companies that need to maintain a list price tag for a defined time frame or stabilise their profit and loss account on the cost and/or revenue side.
SOURCE: Istat; Eurostat; World Gold Council; Club degli Orafi – Intesa Sanpaolo periodic Survey