Gold prices rose to a new record high on Tuesday as demand from trend-setting investment funds offset a stronger dollar and the prospect of higher US interest rates remaining longer.
Gold rose in spot trading by 0.5 percent to $2,262.51 per ounce, after reaching its highest levels ever at $2,266.59.
The yellow metal reached unprecedented levels for three sessions in a row.
“The underlying demand from individuals and central banks was joined by trend-setting speculators who extended their already elevated long positions after crossing the $2,200 level,” Saxo Bank’s Ole Hansen said.
He continued: “In addition, there is no doubt that geopolitical tension has added a measure of support.”
Gold rose 9.3 percent in March, the largest monthly increase since July 2020, in light of continued demand for safe havens and central bank purchases. The Chinese central bank has added gold to its reserves for 16 months in a row.
Gold continued to rise on Tuesday, despite the rise in the US dollar, after data yesterday, Monday, showed that the US manufacturing sector grew for the first time in a year and a half in March.
Traders reduced their bets on a June interest rate cut to 56 percent after the data was released, according to the CME Group’s Fed Watch service.
“What makes gold’s rally unconventional is that it is occurring despite significant headwinds in the form of a stronger dollar, rising Treasury yields and the possibility that US interest rates will remain at elevated levels for a longer period,” independent analyst Ross Norman said.
“Moreover, we are moving into a period of seasonal demand stagnation. You cannot imagine a more pessimistic backdrop,” he added.
Gold usually rises as interest rates are lowered because this reduces the opportunity cost of owning bullion.
Support extended from gold to other precious metals.
Silver rose 2.3 percent to $25.66 an ounce, platinum increased 1.8 percent to $918.10, and palladium rose 3 percent to $1,026.
2024-04-02 13:23:55
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