They continues to run on international markets and comes close to touching the threshold of $2,500 an ounceon the expectations of a more accommodating monetary policy than central banks and of a request supported by consumers and institutional actors (central banks).
But what is happening these days on the market? And why is gold (unusually) rising along with the dollar?
Gold’s New Highs
The precious metal reached last night new highs of $2,487 an ounce, once again approaching the threshold of 2,500 USD now within reach. Then, morning trading saw the price settle at 2,477 USD/ounce, up 0.40% compared to the day before.
On these values gold maintains a up almost 20% since the beginning of the yearafter having achieved a 6% increase in the last month. The prices have soared especially this week, reflecting the news of the failed attack on the former American President Donald Trumpwho gave him a pass to the White House.
The news of global proportions, in fact, has caused the prices of the so-called safe haven assetslike gold, but also the dollar and the yen, which appreciated on the Trump effect. An unusual dynamic, since the trend of gold is the mirror image of that of the dollar and, therefore, the movements are usually of equal intensity and opposite to those of the greenback.
What’s supporting gold
Gold continues to benefit from buying by the central banksof the investment flowsespecially from Asia, the resilience of consumer demand and signs of geopolitical uncertainty.
In 2023, central banks added 1,037 tons of gold, the second highest annual purchase in history, after a record 1,082 tons in 2022. After these record numbers, gold continues to be viewed favorably by central banks as a reserve asset. According to the survey conducted in 2024, 29% of the central banks surveyed intend to increase their reserves golden in the next twelve months.
Demand for investments is also growing. Gold ETFs globally recorded their second consecutive month of positive net flowsattracting US$1.4 billion in June. Total AUM remained stable at US$233 billion.
Among the bullish factors are also the expectations of a Federal Reserve rate cut in September in September and further cuts by the ECB, which would make gold more attractive to international investors.
What prospects?
Looking to the future, the World Gold Council predicts that the global economy will show a faltering growthwhich would imply the need for interest rate cuts, in a context of falling but still too high inflation.
Based on this outlook, the WGC believes that the gold price today already largely reflects consensus expectations for the second half of the year, so a catalyst for a further upward move. Catalyst that could come from the falling rates in developed markets and continued support from global investors.
