Stable value

Gold price continues to rise: too late to invest?

Posted by MoneyController on 02.04.2024

The price of gold continues to rise. At this hour (2 April), an ounce of gold is quoted at over $2,250. This means that not only is the price of the precious metal continuing to rise, but it is breaking its own past records all the time. What can explain the rise in gold?

The prospect of an interest rate cut pushes gold higher

One of the reasons given to explain gold's rise is the prospect of an interest rate cut. A 'CNBC' article by Lee Ying Shan quotes market strategist Joseph Cavatoni of the World Gold Council. Cavatoni believes that one of the biggest drivers of the gold price is market participants' confidence that the Federal Reserve (Fed) will cut interest rates. In particular, adds Shan, the markets believe that a Fed rate cut is likely in June.

Key role of investor and central bank demand for gold

The other major reason that can explain such a rise in gold prices is the demand for the precious metal from major investors around the world, in particular some major central banks. It is precisely this demand that can explain the reason for such a rise in the price of the yellow metal, not least because no interest rate cuts have taken place so far. Demand for gold has been particularly strong in China, where investors may be looking for a store of value in the face of disappointing stock market results and the state of the economy (particularly difficulties in the property market).

What is the outlook for the gold price?

Although it is impossible to predict the price of gold, many experts expect prices to remain stable or rise. On 'CBS' (in an article by Aly Yale), the opinion of Steve Azoury (Azoury Financial) is quoted, who believes that the gold price will remain stable for the next two months. Looking beyond the next two months, the outlook reported by 'CBS' is generally bullish: Peter Boockvar, CIO of Bleakley Financial Group, believes that gold can continue to rise this year. According to JP Morgan, gold could peak in the second half of 2025. According to Alex Ebkarian of Allegiance Gold (also mentioned on 'CBS'), the price of gold should remain stable for the next few months and perhaps continue to rise over the next two years.   

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