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Gold marks another all-time high at $2,150 after Powell's (Fed) words

MADRID, 6 Mar.

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Gold marks another all-time high at $2,150 after Powell's (Fed) words


The troy ounce of gold, a safe haven asset par excellence, has pierced its historical highs for the second consecutive day, registering a rise of 1% and touching $2,150 after the words of the president of the United States Federal Reserve (Fed), Jerome Powell , which has pointed out before the Congress of that country that it is likely that the organization will begin to lower interest rates this year if the US economy "evolves as expected."

According to market data consulted by Europa Press, shortly after the European stock markets closed, the precious metal rose 1%, to $2,150.08 per ounce. So far this year, gold has accumulated a revaluation of 4%.

Yesterday, gold achieved a rise of 1.27%, shortly after the opening of Wall Street, reaching $2,141, thus reaching a historical maximum - broken this Wednesday - and beating the previous mark of December 4, when it touched the 2,135 dollars.

Gold, which is quoted in dollars, has an inverse relationship with the 'greenback': a weak dollar makes gold more expensive, since more 'greenbacks' would be needed to obtain it and vice versa. In that sense, investors seem to see an interest rate cut - the so-called 'price of money' - by the Fed as close, although Powell has stated that "the Fed needs greater confidence that inflation will fall to cut The types".

Regarding this recent rally in gold, Julius Baer expert Carsten Menke commented that gold prices have been skyrocketing since the week began despite the fact that the usual drivers of gold - the dollar, the US bond and the search for a safe haven value - did not move.

In that sense, he has argued that "it seems that gold received a boost from bitcoin", another asset considered alternative by investors and which also pierced its all-time highs this Tuesday by exceeding $69,000 after an important bullish 'rally' that began in January for the approval in the United States of exchange-traded funds (ETFs) of this cryptocurrency.

"This optimism seems to be overflowing into the gold market, although the fundamental context is very different from that of bitcoin," Julius Baer pointed out and then argued that, barring a recession in the United States and a shift in US monetary policy in the form of of rate cuts, considers that "gold prices are on an unstable basis and there are more disadvantages than advantages in the medium and long term; that said, short-term price risks are skewed to the upside."

For his part, Jupiter AM's gold and silver investment manager, Ned Naylor-Leyland, explained that one of the main reasons for gold's resilience, despite the headwind of high real interest rates, It is the sovereign accumulation of gold.

In that sense, it has been estimated that global central banks purchased 1,037 tons during 2023, the second highest annual total on record. He also noted that bullion flows have also been particularly strong in the East in light of recent withdrawals from the Shanghai Gold Exchange (a way of measuring total demand in China), which has reached an all-time high. since July 2015.

However, he noted that despite strong demand from Asia, Western investors "remain largely on the sidelines, as evidenced by the drop in gold ETFs."

"We believe that the current dynamics of negative flows in ETFs will change significantly in favor of the asset whenever gold decisively breaks the level of $2,150 per ounce," he predicted.

The price of gold resurfaced strongly due to the return to the foreground of the Palestinian-Israeli conflict, while since last October 7 - the day of the attack by the Islamist Hamas militia on Israeli territory - the metal has accumulated a revaluation of more than 15 %.

In this way, driven by geopolitical risks and massive purchasing by central banks, gold reached a new level in early December for its historical records above $2,100.

Prior to that bullish streak last fall, the last time gold traded above $2,000 was in May 2023 due to the tension in the Ukrainian conflict and the shocks derived from the US regional banking crisis, as well as the Credit Suisse bankruptcy last March, so that its value reached a value of $2,063 at the beginning of May.

However, the previous all-time high for gold - prior to last December 2023 - occurred on March 7, 2022, when the ounce touched $2,075, beginning two weeks before the Russian invasion of Ukraine. At the same time, it was also around those levels in August 2020 after the outbreak of the pandemic.