“The price of gold again updated the historical maximal (golden value of gold reached $ 2,870 for an ounce due to mass purchases by centuries and geopolitical risks. The growth of 10% since the beginning of the year has become the fastest pace since 1980.”, – WRITE ON: Unn.ua
According to media reports, an additional impulse was granted to the rise in gold prices, imposed by the Donald Trump administration, which helped to increase demand for track assets.
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Gold demonstrates rapid growth, exceeding 10% of the beginning of the year – such rates have not been observed since 1980. This causes discussions among investors about the possible beginning of a new “golden era”. Central banks increase reserves, and the exacerbation of the geopolitical situation only increases interest in precious metal.
On Wednesday morning at European auctions, the price of gold continued to grow, exceeding $ 2,870 (2 780 euros) for an ounce. Investors, including central banks, actively buy ingots against economic uncertainty. This time, the rise in gold price is not only due to traditional factors, such as the weakening of the US dollar or reducing the profitability of bonds, but also with more fundamental structural changes.
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The Crescat Capital Macrostrate Otavio Costa notes that the world is observing a historical lesson about the role of gold in real time. According to him, the current price increase is explained by the complex of macroeconomic factors that resemble the economic crises of the past. In particular, the record level of public debt repeats the situation of the 1940s, while inflationary pressure resembles the challenges of the 1970s. In parallel, extreme assets in the stock markets are caused by associations with financial bubbles of the 1920s and 1990s.
Given the increase in the US budget deficit, the revival of production and the processes of delobalization in G7, gold is increasingly regarded as a tool for protecting against financial instability. The key driver of the current rally is the unprecedented level of gold purchase by central banks. According to the World Council on Gold, in 2024 they purchased more than 1,000 tons of precious metal – the third year in a row. At the same time in the fourth quarter the pace of procurement increased to 333 tons.
Global gold reserves have doubled over the last decade, and this trend is likely to be a concern for fiscal stability and geopolitical risks of the United States. Callum Thomas, the head of the Topdown Charts Research Department, emphasizes that central banks reorient their reserves for gold against the background of increasing financial threats.
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Goldman Sachs predicts a further increase in demand for gold, in particular because of the decision to freeze the assets of the Central Bank of Russia in 2022. This has led to a fivefold increase in demand for the bonds of the world’s central banks in the London OTC market, which indicates an increase in fears of potential financial restrictions.
Goldman Sachs keeps an optimistic forecast for gold, calling a long position in this asset “trade with the highest level of trust” among raw materials.
Samantha Bank Analytist believes that gold will remain an effective hedging tool from risks, including escalation of trade wars, disruptions in oil supply and debt crises.
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Trade policy also contributes to the increase in demand for gold. The Trump administration introduced 10% of the import of goods from China, which came into force on February 4. In response, China introduced countermeasures, including duties on US goods, restrictions on export of strategic minerals and antitrust investigations. Goldman Sachs economist Jan Gatzius predicts further escalation of trade voltage, including increasing tariffs for Chinese imports by another 20% and the introduction of new duties on European cars.
Recall
Last week, gold prices increased against the background of investors’ concern about the possible import tariffs of US President Donald Trump.