The price of gold has continued to rise on speculation that interest rates will fall and has reached an all-time high. On Tuesday, a troy ounce (about 31.1 grams) traded on the London Stock Exchange for $2,141 (1,974 euros).
The precious metal has never been so expensive. The old record from December is history. The gold price also reached a record high in euros. Here, in 1974, euros were paid for a troy ounce of the precious metal, which is more than ever before.
Stronger demand for safe havens
The gold price has been rising since the end of February. The price has risen by about $100 per ounce over the past three trading days. The rising price of gold on the market is explained by the greater demand for safe investment havens, which also include the precious metal. Reference is made, among other things, to geopolitical risks in the Middle East.
The main driving force behind the increase is speculation about falling interest rates. Because investments in gold do not earn interest, declining returns on the capital market increase demand for the precious metal.
Disappointing figures from the US
“The catalyst behind gold’s recent rise is the disappointing economic data from the United States,” said Alexander Zumpfe, precious metals trader at trading house Heraeus, explaining the price development. Lately, speculation about falling interest rates has been heightened by disappointing data on the mood in US manufacturing and US consumer confidence, among other things.
“A slight downward correction would not be surprising”
On the financial markets, the first interest rate cut by the US Federal Reserve is currently expected mainly in the summer. However, commodities expert Thu Lan Nguyen of Commerzbank points out that there is still a lot of uncertainty about the start of the interest rate cuts. She sees the strong rise in the gold price as vulnerable. “A slight downward correction in the coming days due to profit-taking would not be surprising,” said the Commerzbank expert.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
