Gold: Because investors bet on $3,000 per ounce

His honor recorded a new historical record on Monday (19,8,2024), sometime exceeding $1,540 per ounce, while last April he had exceeded the levels of $2,350. Profits are fueled by optimism that Fed was approaching interest rate reduction, as higher interest rates usually work negatively for gold. The reduction in lending costs generally favours gold, which does not offer interest and is pressed when Fed’s interest rates are high. The rise in inflation we have been experiencing in recent years helps to increase the price of gold, as the rise in the price of gold is more aggressive in times of inflationary pressures. Also the exacerbation of geopolitical developments in Ukraine and the Middle East increases demand for yellow metal. The recording of new history high for gold puzzles a portion of analysts, as they consider that geopolitical tensions and macroeconomic data cannot justify such a great rise. At the same time the unprecedented rally of precious metal is noted despite the rise in yields of American public bonds, which usually exerts pressure on the price of gold. The rise in yields makes the assets giving interest more attractive than gold. Commerzbank analysts, the second largest bank in Germany, estimate that “gold market developments have the characteristics of a rational bubble”. The Commerzbank freight section points out that there is a discrepancy between the price of gold and fundamental sizes and which cannot continue forever. However, Citi analysts appear more optimistic and place the price of gold at $3,000 per ounce in the next 12 to 18 months. Request from central banks Official gold reserves in the world totaled 36,089 metric tons in May 2024, according to the World Gold Council. This is quite a large quantity, since market estimates indicate that about 212,582 metric tons of gold have been mined throughout history, according to the World Gold Council. The increase in demand from central banks can largely explain the rise in the price of yellow metal. Gold markets from central banks have touched on record levels in recent years, as financial institutions want to diversify their reserves and reduce credit risks. China and Russia are in the first place buying bars while India, Turkey and Brazil follow. According to a report by the World Gold Council (WGC), central banks worldwide for two consecutive years exceeded 1,000 tonnes of net purchases. The People’s Bank of China reports an increase in gold reserves for 17th consecutive month in March. Since early 2024 it has increased its reserves of gold to 2,260 tonnes from 2,070 tonnes in 2023, while a significant increase in stocks, in the first quarter of 2024, is also recorded by India and Poland. First in gold reserves, according to figures of 3rd quarter 2023, was the US with 8,133 tonnes, totaling $489 billion, and second Germany with 3,352 tons, worth $201 billion. Following Italy with 2,451 tons, worth $147 billion, France with $2,436, worth $146 billion, Russia $2332 with $140 billion and China with $2,91 billion, worth $113 billion. Turkey had at the end of the third quarter 478 tonnes, worth 28 billion dollars, Greece 114 tonnes, worth $6.87 billion and Cyprus $13.9 tonnes, worth $836 million. Source: RES – ICM