WRising fears of a recession in the United States pushed gold prices toward record highs ahead of Easter. At times in the past week, a troy ounce (31.1 grams) cost a good 2032 dollars.
This makes the precious metal more expensive than it has been in more than a year – and it is not far from the all-time high of 2075 dollars from 2020. “The weak American economic data make further interest rate hikes less likely, which makes gold more attractive for investors”, said Alexander Zumpfe, gold dealer at the Heraeus precious metals group in Hanau. In addition, the precious metal received support from the weaker US dollar.
Economic worries and banking crisis
Because of the recently disappointing American economic data and because of the recent turbulence in the American banking sector, the dollar has lost value. The result: gold traded in dollars is becoming cheaper on the world market, which increases demand for the precious metal. In March, the banking turmoil had startled investors and pushed gold prices above the $2,000 mark. London-based gold trading firm Bullion Vault reports the number of first-time purchases by people new to gold on its platform doubled in March. However, the world is “a long way from a gold rush,” said Adrian Ash, the company’s analyst.
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For detailed view
Commodity expert Thu Lan Nguyen from Commerzbank reported: “We have raised our year-end forecast from $1,950 to $2,000 per troy ounce.” However, this has not yet been achieved.
The industry organization World Gold Council had recently reported not only stable, high demand from private investors for bars and coins, but also the central banks had bought an unusually large amount of gold. Overall, central bank gold demand rose 152 percent to 1,135.7 tons last year. That was a new 55-year high, according to the Council.
Now China has apparently increased its gold reserves again. China’s central bank increased its holdings by around 18 tons in March, according to data on the People’s Bank of China website. The total stocks now amount to about 2068 tons. Russia, on the other hand, announced in February that it would part with 3.6 tons of gold in order to plug holes in the budget.
In the past, regular reports from the central banks, above all from the American Federal Reserve, about rising interest rates had dampened any attempt at a rise in the price of gold. However, since there has been more discussion about whether and when the central banks could take a break from raising interest rates, interest-free gold has benefited from this. Craig Erlam, senior market analyst at trading house Oanda, writes: “The metal may have record-breaking ambitions – but that could depend on yields falling further.”