Gold prices reached an all-time high, closing at $2,126 per ounce on March 4, marking the highest closing since the inception of contracts in 1974. This remarkable milestone comes on the heels of a record-breaking peak in December 2023, when gold prices touched $2,149 per ounce.
The recent spike in gold prices follows two consecutive weeks of gains against the backdrop of significant economic indicators. Despite the 16th consecutive month of decline in the US manufacturing sector in February, along with a downturn in US inflation, the value of the US dollar, and treasury yields, gold has demonstrated resilience.
Surprisingly, gold has maintained its strength amid high-interest rates and robust equity markets. Analysts attribute this resilience to various factors, including global economic uncertainties and geopolitical tensions.
Reviewing the trajectory of gold prices in recent years, the precious metal experienced a notable 5 percent increase in 2023, building upon previous gains. This positive trend is anticipated to persist in 2024, with leading financial institutions offering diverse outlooks.
What is the analyst’s view on gold?
“A wider robust fundamental backdrop added support, including strong physical demand in Asia and central bank purchases. Dollar index and US 10 Yields have been very resilient during this volatility in commodities market, hovering around the 104 and 3.2% mark. The Fed chair Powell’s two day congressional testimony will be closely watched for more clarity on the US interest rate path,” said Manav Modi, analyst, commodity and currency at Motilal Oswal.
Modi also added that, bets for a rate cut in June Fed meeting has increased from 40% to ~55% in a month. Gold, which is looked as a store of value during times of political and financial uncertainty, has climbed by over $300 since the Israel-Hamas war.
Whereas commenting on the same Saish Sandeep Sawant Dessai, Analyst, base metals at Angel One said that Amidst escalating geopolitical tensions in the Middle East, gold reached a historic high on Tuesday, fueled by increased speculation of an imminent interest-rate cut by the U.S. Federal Reserve in June.
“The focus now turns to Federal Reserve Chairman Jerome Powell’s two-day congressional testimony this week, set against the backdrop of crucial jobs data. We expect gold to trade lower towards 64600 levels, a break of which could prompt the price to move lower towards 64460 levels,” added Dessai.