Monthly report (NO17 Gold) – May 2026

Monthly fund update

Key points

• NO17 Gold finished May up 1.7% (in Australian dollars, hedged to the Australian dollar), outperforming gold bullion and the universe of gold miners while the gold market continued to consolidate.
• Gold has corrected approximately 20% from its January all-time high of US$5,589 per ounce, to be +5.1% year-to-date as of the end of May. The universe of gold miners has fallen further and is +4.5% year-to-date. We attribute the correction to liquidity, technical and systematic-flow factors, rather than a deterioration to fundamentals.
• Gold’s correlation (r2) to the S&P 500 spiked to 0.79 during May, relative to its 20-year average of approximately 0.05. We also consider this a temporary anomaly rather than a breakdown in gold’s diversification properties.
• Gold markets are consolidating in what we believe will prove to be a much longer uptrend. This creates an entry point for investors looking to gain exposure (or to add to their positions).
• What about the fundamentals? Despite some describing central bank demand as moderating, net purchases for the latest month reported was in line with the 12-month average (despite gold sales by countries including Turkey and Russia, due to economic pressures magnified by the Iran-related energy crisis) and remains a key structural demand driver driven by reserve diversification away from US Treasuries..
• While it hasn’t received any attention in the gold market or the mainstream media, we believe it is plausible that commercial banks (which are estimated to hold in the order of US$3-5 trillion of US Treasuries, a similar amount to central banks) have been purchasing gold in significant quantities for their regulated reserves under Basel III, also driven by reserve diversification away from US Treasuries. This only recently became feasible following the framework’s explicit upgrade of gold bullion to ‘Tier 1 High-Quality Liquid Asset’ status in July 2025.
• While May saw net outflows from gold bullion ETFs, we attribute this to the above mentioned short-term factors as well as US dollar strength, higher real yields on US Treasuries and greater appetite for higher-risk assets such as semiconductor stocks. There is no change to our view that ETFs remain in an accumulation cycle which we expect to be a material tailwind over the next 1-2 years at least.
• The fundamentals of the gold mining sector are compelling (i.e. EBITDA margins comparable to or better than Nvidia, un-levered balance sheets, and trading on 10x 1-year forward P/FCF which is a material discount to fair value and historic norms).

Please note that the detailed positioning disclosures included on the second page of our report have been redacted and are only available to unit holders in the fund.