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Gold Price Reaches New Highs of $2,280 Per Ounce

Published by honor in category Market News on 03.04.2024
Gold price (XAU-GBP)
1,838.01 GBP/oz
  
- GBP22.65
Silver price (XAG-GBP)
21.65 GBP/oz
  
- GBP0.78

Gold soared to yet another historic milestone, surpassing $2,280 per troy ounce at the beginning of April. Additionally, throughout the month of March, the price of gold surged by 9%, while it exhibited an impressive 8% increase over the quarter.

Continued upward movement in gold prices is anticipated to be fuelled by significant inflation data. Economists foresee a gradual rise in inflation. Certain analysts assert that gold is gathering momentum, as inflation worries appear to be diminishing compared to previous levels. Last week, the US Federal Reserve reaffirmed its intention to implement three rate cuts this year, despite inflation persisting above its 2% target.

Gold reflects the US debt situation. And it hurtles in the sky

Tim Murphy, vice president of All pro gold .

Many analysts have suggested that the rise in buying and selling of gold is a signal that investors are concerned that the FRS will not be able to control inflation when the period of interest rate cuts begins. Analysts also agree – gold also enjoys support as a provider of geopolitical risks.

Read more on the topic: What is The Federal Reserve?

Many analysts believe that the increase in gold bullion prices suggests investor worry about the Federal Reserve’s ability to control inflation when interest rates are lowered. Additionally, analysts also believe that physical gold is seen as a safe investment during times of geopolitical instability.

Geopolitical anxiety remains and will only increase as November’s US elections approach

The precious metals analyst and creator of The Mining Stock Journal noted that the US monetary base has grown nearly 10% since March 2023.

Gold now seems to anticipate that at some point a large-scale money printing program will kick in. In fact, the processes of printing low-quality money have already been launched,” the expert said.

What Can Affect the Price of Gold Bullion?

Since December 2015, the market prices of gold and silver have shown a sideways to upward trend.

Historically, significant events like the following have triggered spikes in precious metal prices:

  • A banking sector mini-crisis that commenced in March 2023 with Silicon Valley Bank.
  • The onset of the Ukraine war in February 2022.
  • Federal Reserve rate cuts and quantitative easing akin to those witnessed in 2020 and 2008.

In each of these instances, the surge in demand for monetary metals, particularly gold and silver, primarily served as a hedge against the risk of fiat currency devaluation.

There’s a possibility of recurring similar events. The US banking system is notably fragile, particularly with the decline in the commercial real estate market.

Alongside the conflict in Ukraine, tensions have escalated in Gaza, and there’s a looming threat of a Taiwan invasion. The phrase “we are in a state of war” is increasingly echoed in the media, making the progression of events seem less far-fetched. Wars incur significant costs, often met by incessant printing of dollars.

So, what if there’s a genuine threat to the stock market? The Federal Reserve would likely be compelled to lower interest rates and resume quantitative easing, necessitating even more dollars in the long term. However, gold and silver cannot be artificially produced.

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What are central banks, such as the Bank of England, doing in the interim? They’re purchasing gold in unprecedented quantities from bullion markets in the financial market including the London Bullion Market.

It appears that we’re just one event or crisis away from significant financial repercussions that could sustainably drive up the prices of precious metals in the form of bars or coins.

Key Takeaways

In conclusion, the ascent of gold to new heights, surpassing $2,280 per ounce, signifies not only a remarkable milestone but also reflects a broader trend of upward movement in precious metal prices. The surge observed throughout March, coupled with an impressive quarterly increase, underscores the resilience and attractiveness of gold as an investment avenue.

Looking ahead, the trajectory of gold prices is poised to be influenced by a multitude of factors, with significant attention directed towards inflation data. Economists foresee a gradual uptick in inflation, further fuelling the momentum behind gold’s rise. Moreover, concerns regarding the Federal Reserve’s ability to manage inflation amidst the anticipated cutting rates add to the appeal of gold as a hedge against currency devaluation.

Geopolitical tensions, including conflicts in regions like Ukraine and Gaza, alongside the looming threat of a Taiwan invasion, contribute to a climate of uncertainty, driving investors towards safe-haven assets such as gold. The spectre of future crises, coupled with the potential ramifications of increased money printing, reinforces the allure of gold as a store of value in times of economic turbulence enhancing the supply and demand.

In light of these factors, central banks are increasingly turning to gold as a means of diversifying their reserves and safeguarding against market volatility in real time. The surge in central bank purchases underscores the enduring appeal of gold as a tangible asset in an uncertain financial landscape.

As we navigate through a complex web of economic and geopolitical challenges, investing in gold stands poised to maintain its status as a beacon of stability and security in an ever-changing world. With the potential for further upheavals on the horizon, the allure of gold as a timeless store of value remains as steadfast as ever, offering investors a safe harbour amidst the stormy seas of global uncertainty.

Gold price (XAU-GBP)
1,838.01 GBP/oz
  
- GBP22.65
Silver price (XAG-GBP)
21.65 GBP/oz
  
- GBP0.78

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