Gold price all-time high

(London) Gold reached a new historic high on Tuesday, propelled by the prospects of rate cuts from the American Federal Reserve which benefit the yellow metal, a competing safe haven.

Gold rose to $2,141.79 an ounce, surpassing its previous high of $2,135.39 reached in December.

“Concerns about the global economic outlook, geopolitical tensions and the shift in expectations towards anticipated interest rate cuts have fueled increased demand for the precious metal,” notes Ricardo Evangelista, analyst at ActivTrades.

Gold Rush

Even if “the pace of progression of the metal is perhaps less spectacular” than that of bitcoin (which also reached an absolute record on Tuesday, at more than 69,000 dollars, editor’s note), the progression of gold has remained regular, until this new high, reacted Russ Mould, analyst at AJ Bell.

Over one year, the price of the yellow metal jumped around 15%.

The recent surge in prices “was triggered by weak US data,” notes Thu Lan Nguyen, analyst at Commerzbank.

On Friday, the ISM index of activity in the manufacturing sector in the United States fell to 47.8% in February, compared to 49.1% in January, well below expectations.

Other indices showed a decline, such as construction spending in January in the United States, and American consumer confidence in February.

This data reinforces expectations that the Federal Reserve (Fed) will soon lower its rates in order to support its economy.

Analysts are currently considering US monetary easing in June.

However, low rates are likely to weigh on US bond yields and the dollar, diverting investors towards the yellow metal, also considered a safe haven.

Although not yielding returns, gold is known as a less volatile and therefore safe asset.

Slowing price growth in the United States, which is trending towards the US central bank’s 2% target, also supports bets of an imminent rate cut.

The PCE index, a measure favored by the Fed to measure inflation and guide its monetary policy, fell to 2.4% over one year in January, compared to 2.6% in December.

Furthermore, gold also played a role as a safe haven in a context of increasing geopolitical risks, in particular the tensions linked to the war between Israel and Hamas, as well as the attacks by the Houthi rebels of Yemen on the ships in the Red Sea, which disrupt maritime transport and oil supplies.

In times of crisis, the yellow metal is favored by investors in that it is also sometimes considered safer than the stock market.

“We would not be surprised to see a small downward correction in the coming days following profit-taking” by investors, tempers Thu Lan Nguyen.


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