Precious metal rally
Why the price of gold could rise even more dramatically
The price of gold goes up and up. Time for a decline, right? However, experts expect further records – and other precious metals are also becoming increasingly expensive.
Become Gold price observed, I couldn’t help but be amazed over the past few days. A rapid record hunt for precious metal quotations is currently the dominant theme on the financial markets. For a week, the price of gold jumped from one record high to the next.
Generally the prices are for Precious metals has been flying high since the beginning of September. During this time, gold and silver have increased in value by about a third.
It’s not just the price of gold that is experiencing a surge
Similar rapid price increases can also be seen for platinum. What is unusual for experts is the steep rise in prices for weeks without any significant countermovement. And many investors are wondering: Is it worth getting in now?
Gold: There are several reasons for the strong price increase
When investors are looking for safe havens, gold is at the top of the buying list. Demand is being driven by the uncertainty of many investors due to the escalating customs dispute between the USA and China and geopolitical risks also from the Russian war of aggression against Ukraine.
Recently, concerns about some regional banks in the USA have emerged on the market and are supporting demand. The record hunt temporarily drove the price up to $4,379 per troy ounce (around 31.1 grams).
There is also the prospect of further falling interest rates in the USA. The US Federal Reserve is now expecting two more interest rate cuts this year. Since gold does not generate market interest, falling interest rates in the largest economy increase demand for the yellow precious metal, especially since the falling price of gold also increases US dollars makes gold more attractive for many investors outside the dollar area.
Other price drivers include strong demand for exchange-traded securities (ETFs) backed by gold and gold purchases by central banks that want to make their reserves a little more independent of the US dollar.
Silver: Also sought after by industry
Similar to the price of gold, the price of silver has only known one direction for weeks: steeply upwards. While the price of gold has risen comparatively slowly over a long period of time, silver prices have shown extremely strong price jumps on several occasions over the past few decades.
A rapid climb was quickly followed by a rapid descent. For example, in 1980 the price of silver had shot up at a similar rate as in the past few weeks. At that time, a speculative bubble had already pushed the price of an ounce of silver above the $50 mark. It was only with the most recent high that the record was broken, when the price of silver recently rose to over $54.
Silver is also used in industry because, among other things, it has good electrical conductivity. “Silver benefits from its special position as a precious metal and industrial metal,” says an analysis by DWS. The fund company’s experts recognize a shortage in the supply of silver for applications in photovoltaics or wind turbines, among others. According to the DWS experts, private investors are also increasing the trend: “The demand for physical silver is increasing; some mints are reporting record sales,” says the analysis.
Platinum: 86 percent more expensive year-on-year
Platinum has also become significantly more expensive since September, with prices recently rising to $1,654 per ounce. However, the price is well below the record high reached in 2008 at $2,300. However, the recent price increase for platinum is one of the strongest among precious metals. “With an annual increase of 86 percent, platinum remains at the top of the list of metals,” says an analysis by Bankhaus Metzler.
The price development of precious metals has not shown any major corrections in recent trading days, which is unusual. Commodity analyst Carsten Fritsch from Commerzbank observes that “price declines are viewed by market participants as a buying opportunity.” Therefore, new record values can be expected. However, expert Fritsch also made it clear that if the upward trend continues, the risk of a stronger setback also increases.
However, the reasons for the soaring prices are unlikely to change much for the time being. “Expectations of interest rate cuts, political uncertainty in the USA and ongoing geopolitical tensions suggest that the upward trend remains intact for the time being,” said precious metals trader Alexander Zumpfe from Heraeus. In his opinion, gold is likely to remain “the preferred refuge – with further upward potential”.
DPA
adj
Source: Stern
