Gold's record price exceeds $2,200
Stable value
Posted by MoneyController on 21.03.2024
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Gold continues to break records. Today it is worth more than $2,200. But why is the price of the yellow metal continuing to rise?
Gold has once again broken all records. However, it is not easy to explain this bullish cycle in the price of the precious metal. The new record was broken just after Jerome Powell's Federal Reserve left interest rates unchanged. It therefore remains likely that the first cut will come in June and not earlier, as some market analysts had believed.
Gold traditionally has a negative correlation with its reference currency, the dollar, and with interest rates. It also tends to strengthen in times of inflation, as it is seen as a safe-haven asset. It is likely that the Federal Reserve (and probably the European Central Bank) will cut interest rates this year. But the explanation that gold is rising on the back of these expectations alone does not seem to convince all analysts.
As Sandra Riccio writes in 'La Stampa', one of the reasons for the strong rise in the price of gold is the massive purchases by the central banks of some important countries, such as China and India (but also Poland, the Czech Republic, Libya and Singapore).
Another reason that could explain the rise in gold prices is geopolitical risk and the uncertainty surrounding the US election campaign. Geopolitical risks include bloody conflicts such as those in Ukraine and the Gaza Strip, but also the tensions caused by the Huti rebels in the Red Sea and, last but not least, the tensions between the US and China, especially in the Pacific.
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