Gold prices had another go at the upside on Friday, setting a new all-time high of $2,431 an ounce before falling back sharply later in the session.
Gold garnered all the attention last week, seemingly ignoring the latest round of bearish macroeconomic pointers, with the bulls apparently firmly in control.
Prices fell back later in the day Friday to around $2,360 an ounce in late deals, compared with $2,375 an ounce on Thursday.
Various theories were in circulation in the latter half of the week regarding gold’s sudden surge higher, from technical factors, to Chinese demand, to wider structural themes around central bank buying and concerns over persistent inflation reducing the purchasing power of fiat currencies.
Recent data have pointed to outflows in gold-backed ETFs, suggesting that the current bout of increased buying is coming from the physical markets.
In particular, the negative price impact of a possible delayed start to interest rate cuts this year by central banks appears to have been overshadowed by extremely bullish sentiment around gold as a safe haven asset. This has been exacerbated by worries over the risk of a wider conflict in the Middle East between Iran and Israel.
The lofty highs reached last week have left markets wondering what is next in store for gold prices, although Friday’s late pull-back may indicate that the strength of this most recent rally is starting to wane.
US retail sales figures out on Monday may provide more for the markets to chew over, while Chinese industrial production and retail sales figures on Tuesday may give fresh insight into conditions in Asia’s largest economy.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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