Submitted by admin on April 3rd, 2024
On Tuesday, gold prices set up a new record boosted by momentum-following funds that outsmart a strong US dollar and the chance of higher-for-longer US rates.
After escalating to $2,266.59, which is an all-time high for gold price, spot gold jumped up 0.5% to $2,262.51 per ounce by 1055 GMT. The glittering yellow metal has been touching new highs for 3 consecutive sessions.
“An underlying bid from retail and central banks is being joined by momentum-following speculators who have extended their already elevated longs following the break above $2, 200,” Ole Hansen said at Saxo Bank.
“In addition, there is no doubt that geopolitical tensions have added an additional layer of support,” he added.
The bullion jumped by 9.3%, the biggest monthly growth it had achieved since July 2020, amid continuous central bank purchases and safe-haven demand. The Central Bank of China has been adding to its gold reserves for 16 months.
Gold continued rising on yesterday, offsetting a strong US dollar after Monday’s data showed US manufacturing growth for the first time in 1-1/2 years in March.
According to the CME Group’s FedWatch Tool, traders cut bets of a June interest rate to 56% after the data was released on Monday.
“What makes the gold rally so unusual is that is occurring despite significant traditional headwinds with the U.S. dollar rising, treasury yields rising, the likelihood of higher for longer U.S. rates increasing,” said Ross Norman, an independent analyst.
“Furthermore, we are moving into a slack period for seasonal demand. You could not imagine a more inauspicious backdrop,” he explained.
Amid soaring prices, European physical investors are disposing of the bullion wholesale back to their dealers and it has cratered demand in the Indian market, according to Norman.
Meanwhile, what is happening in the gold market has also spread to other precious metals.
Spot silver jumped 2.3% to $25.66 per ounce whereas platinum and palladium climbed 1.8% to $918.10 and 3.0% to $1,026 respectively.
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