Gold hits a new historical record: what moves the metal

L’Gold flew on a new one historical record, updating the highs reached last December, in the wake of a series of factors such as geopolitical uncertainties, central bank rate policies, their reserves and the trend of inflation. This mix of factors triggered a rally that has lasted for 16 months and which has brought the value of gold to a peak of $2,141 an ounce, to update the previous record of 2,135 USD. It should be noted that gold has gained around 30% since the end of 2022 when it was valued at $1,600 an ounce.

Expectations on rate cuts

The expectations of a contribute to supporting the precious metal rate cuts by the Federal Reserve and the ECB, expected by June. An evolution that would give a bullish signal to the precious metal, which always benefits from lower interest rates, although this time the rally continued even during the restrictive phase of monetary policy.

And it is precisely in the prospect of a possible rate cut that the speech by Fed Chairman Jerome Powell before the joint Economic Commissions of Congress.

What influences the performance of gold is then the ECB meeting this Thursdayeven if no news is expected on the interest rate front, but only an update of the economic and forecast framework of the Eurotower.

Central banks continue purchases

To support the demand for gold and therefore prices have contributed in the last year massive purchases by central bankswhich are replacing the reserves in dollars, more subject to volatility, with larger quantities of the precious metal, more stable and safe, in the face of geopolitical tensions and the ongoing conflicts in Eastern Europe and the Middle East.

From the last report of World Gold Council It emerges that the series of purchases by central banks has continued since 2022 at a dizzying pace. Last year the demand reached 1,037 tonsstanding as the second highest on record, down just 45 tonnes from the previous year.

A safe-heaven in all respects

Uncertainties and tensions at a geopolitical level have undoubtedly played the greatest role in directing the demand for gold, an asset that represents a safe haven in phases like this. Of particular note are the sales that hit the Chinese markets, reflecting the crisis in the real estate market.

In this direction they saw themselves wide purchases by Chinese investors, with the World Gold Council reporting a strong increase in demand from China (+17%) offsetting the decline recorded by India (-9%). An interest that was not only motivated by the usual purchases in the jewelery sector, but which was also reflected in capital flight from the real estate sector and the stock market.