Gold Price Reaches New High, Analysts Issue Warning

Published on: Apr 12, 2024
Author: Amy Liu

With tensions in the Middle East and traders carefully considering the latest US economic data, the price of gold has reached a new high. For the stimulating factors of this round of gold price increase, several respondents mentioned the Federal Reserve’s monetary policy, geopolitical tensions, global monetary system restructuring, RMB exchange rate, safe-haven demand, and gold purchases by central banks. However, analysts have different views on the true driving force behind the current rise in gold prices, citing global liquidity, safe-haven demand, and gold purchase by central banks as the main factors.

In early Asian trading, the gold price rose by 1% to $2,395.48. Despite a slight shake in Wednesday’s strong gold price rally due to consumer price inflation data exceeding expectations, it later recovered for the fourth consecutive week since January last year.

A report on Thursday showed that US producer prices in March rose at the fastest pace in 11 months. Nevertheless, the report indicated that certain categories of the Fed’s preferred inflation measure showed weakness, easing concerns of price pressures re-accelerating after several strong economic reports in recent weeks.

At 10:25 AM Singapore time, spot gold rose by 0.8% to $2,391.35 per ounce, with a cumulative weekly increase of 2.6%. The Bloomberg Dollar Spot Index remained largely unchanged. Silver prices reached a three-year high, and platinum and palladium also rose.

However, analysts cautioned investors that although the gold price is still “rising” at present and faces favorable factors such as monetary policy, geographical, exchange rates, and risk aversion sentiments, the pace of future interest rate cuts by the Federal Reserve may slow down, which could have a certain impact on the future of gold. At the same time, the demand for gold purchase by central banks may slow down. Therefore, although there is still room for gold to continue to reach new highs in the medium to long term, investors need to be cautious of the risk of a high-level pullback in the current gold market.

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