Gold prices continued their surge higher on Tuesday, posting a fresh all-time high as the recent bullish momentum showed few signs of abating.
Prices reached a high of $2,365 an ounce – a new all-time high – before easing back to around $2,350 an ounce later in the session. That compares with around $2,340 an ounce in late trades on Monday.
Gold’s powerful move higher over recent days seemed to defy the metal’s typical drivers, with a recent scaling back of bets on a US Fed interest rate cut in June which might be expected to dampen demand for the yellow metal.
Gold’s ability to override these factors may reflect longer-term positioning in the market, given a raft of bullish elements to contend with. Central bank buying has been strong in recent months, and the current heightened geopolitical tensions in the Middle East and in Russia and Ukraine have certainly raised the appeal of safe-haven assets relative to equities and other higher risk investment classes.
A further factor that may be contributing to gold’s gains is that inflation appears to be ‘stickier’ than expected, with central banks still fighting to bring price increases under control before feeling more comfortable with interest rate cuts. This higher-for-longer scenario for inflation, which erodes the purchasing power of fiat currencies, may be giving gold an extra lift as an inflation hedge and reliable store of value.
Moreover, after rallying through most of March, the US dollar has weakened against other major currencies since the start of April, which is a bullish factor for the price of dollar-denominated assets like gold.
Looking ahead, Wednesday will see US inflation figures for March and the US Fed’s FOMC minutes for any potential clues on upcoming monetary policy changes.
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.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.
Read our Editorial Guidelines here.
