Economic concerns push gold prices to record highs

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Rising fears of a recession in the US push the gold price to a record high just before Easter. Not much was lost during the week at $2,075 per troy ounce as of summer 2020. The precious metal was occasionally traded on the London Stock Exchange at $2,031 (currently about CHF 1,842). This makes the precious metal more expensive than it has been in over a year.

The most important factor in the increase in the demand for gold is the price development in the foreign exchange market. The US dollar has tumbled recently amid disappointing US economic data and the recent turmoil in the banking sector after several regional banks in the US went bankrupt. As a result, gold traded in dollars becomes cheaper in the world market, which increases demand.

In March, the turmoil in the banking sector startled investors and at times pushed the price of the precious metal above $2000 per ounce (31.1 grams). A possible recession in the US economy is now seen as an important price factor.

Recently, weak data on the sentiment in the service sector has increased concerns about the contraction in the world’s largest economy. This sparked speculation that the US Federal Reserve would stop raising interest rates. If interest rates stop rising or even fall again, this could increase demand for gold investments.

According to experts, the development of inflation in the leading industrialized countries will play a major role in the further development of the gold price. Central banks have been raising interest rates for months to combat high inflation. The result is increased returns on fixed-income securities, such as government bonds. Demand fell last year, as investments in gold did not yield interest, and the price of gold fell to about $1,600 last fall.

Precious metals trader Alexander Zumpfe of German trader Heraeus expects the price of gold to remain stable below the $2,050 level in the coming months. However, he believes that if this is broken, the price of gold could quickly rise to a record high. “We’ve increased our year-end forecast from $1,950 to $2,000,” said Thu Lan Nguyen, commodities specialist at Germany’s Commerzbank.

(SDA)

Source :Blick