Unfortunately, a 10% correction translates into more than 400 points. Hence, don’t be surprised if the index falls by 400 points. At this level, the bull market will still be intact as the STI remains above its major moving averages. The 50-day moving average is some way away at 4,671.
The price of gold has been a popular investing theme. It is noteworthy that gold is not a medium of exchange, which can be used to make purchases, nor a unit of account, in which prices are quoted. It sits there in vaults, hoarded by manufacturers of gold ETFs, especially ETFs which are fully backed by gold such as SPDR Gold ETF. According to the World Gold Concil, in 2025, global gold ETF holdings grew by 801 tonnes – the second strongest year on record – while bar and coin buying accelerated to reach a 12-year high.
“Central bank purchases of 863 tonnes reached the upper end of our expected 2025 range; they remain historically elevated and geographically widespread but have slowed from their recent pace,” the World Gold Council says.
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A decline in jewellery demand volumes was not surprising with successive record gold price highs, the Gold Council points out.Technology demand was stable despite disruption in the consumer electronics space, supported by continued growth in AI-related applications, the Gold Council adds.
Above all, gold is being viewed as the debasement trade. ““The skyrocketing gold prices we are seeing now are a consequence of what finance types call the “debasement trade.” While the effect of the debasement trade is shown most spectacularly in sharply rising gold and silver prices, it’s also visible in the falling value of the dollar and in rising long-term interest rates,” notes Paul Krugman, winner of the Nobel Prize for Economics in 2008.
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Debasement here means a shift away from US financial assets by investors due to fears of future erosion of the value of those assets. This is probably caused by the perceived loss of independence of the Federal Reserve. As a case in point, 10 year US treasury yields remain above 4.20% and 30-year US treasury yields are entrenched stubbornly above 4.80%.
Conclusion? Investors should stick with assets in safe haven currencies such as the SGD. Even if the STI corrects its overbought position, its main uptrend remains intact.
