Gold prices pushed into higher territory on Thursday, clocking up fresh all-time highs as the markets appeared to ignore macro-economic factors that would normally weigh on the yellow metal.
Prices moved a few dollars either side of $2,340 an ounce for most of the day, but made further gains in the evening to reach a fresh all-time high of $2,380 an ounce in late deals.
That compared with around $2,335 an ounce on Wednesday.
US producer prices rose by 0.2% in March compared with February levels, slightly below market expectations of a 0.3% rise, according to figures released Thursday, while initial jobless claims came in at 211,000, slightly below expectations of 215,000.
Moreover, the US dollar strengthened against other currencies on Wednesday and held its ground on Thursday, while US 10-year treasury yields surged.
Ordinarily, these factors would be expected to weigh on gold, but instead, prices shrugged off the data and pushed to fresh highs. The recent buying shows strong conviction, particularly given that it has come against otherwise bearish signals, and the market was rife with speculation as to who may have been buying in large volume over recent days.
Some commentators have pointed to a potential squeeze on gold prices linked to options buying in the OTC market as a potential candidate for the recent surge higher. This can happen when market prices rise closer to call options strike prices in sufficient volume, triggering delta hedging as the parties on the other end of the trade are forced to buy enough volume to cover their positions, pushing prices even higher.
Whether this is a key factor behind gold’s recent move higher is unclear. Either way, the current climate of heightened geopolitical risk and looming interest rate cuts by central banks has contributed to bullish sentiment for gold as a safe haven asset in times of increased risk, driving higher prices.
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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