In the foreseeable future, the record growth in gold prices may continue, as investors expect that shortly central banks will begin to implement monetary easing policies, within which interest rates will be lowered.
Spot gold prices on Monday, March 11, reached $2,178 per ounce. Last Thursday, March 7, this indicator was recorded at the highest level since 1979.
Spot silver prices rose to $24.36 per ounce on Monday. The contract, which last week showed growth of more than 5%, on Thursday reached its highest level since the end of December.
In recent weeks, precious metals have been showing an increase in value. This trend is largely driven by expectations of lower interest rates in the United States. Last week, Federal Reserve Chairman Jerome Powell said that inflation is approaching the level at which this indicator should be fixed for the financial regulator to start cutting interest rates.
Gold, which has the status of a kind of safe haven asset, becomes more expensive during periods of uncertainty in the economic area. In recent years, this rule has proved its credibility, despite high interest rates and a relatively strong US dollar. Expectations of monetary policy easing in the foreseeable future will support the high price of the specified precious metal.
Marcus Garvey, head of commodities strategy at Macquarie, at the same time said that gold, despite its status as a defensive asset, is subject to fluctuations. Separately, the expert noted that sometimes this precious metal can demonstrate the dynamic corresponding to risk factors, but in some cases, the indicator of its price carries out upward movement despite negative circumstances. Marcus Garvey says that it is important to understand the causes of such trends that determine the vector of gold’s reaction and the state of affairs in the external environment. In this context, the expert noted that interest rate expectations are a positive risk affecting the price of gold.
Marcus Garvey said that short-term data on employment in the United States and inflation can determine whether the cost of the specified precious metal will rise to $2,300 or decrease to about $2,100. According to the expert, currently, the price of gold is incredibly resilient.
Commenting on the dynamic of the price of silver and the prospects for the movement of this indicator, Marcus Garvey says that there is currently a desire to back away from the $24 level to feel that there is a bit more room to run. The expert also noted that the opportunities for backdown correction clearly continue to be vulnerable.
Marcus Garvey said that if global growth accelerates slightly during 2024, silver, both a precious and industrial metal, is likely to go from a relative underperformer compared to gold to be a relative outperformer in the third and fourth quarters of the current year. In this case, the growth rate is implied, not the actual price indicator. Marcus Garvey also noted that the scenario in which silver will be in the mentioned positions to gold is considered a basic one.
Prices for the specified precious metals traditionally show a strong positive correlation. At the same time, silver is sometimes symbolically called a poorer cousin of gold.
At the beginning of the current year, the Silver Institute published a report that predicted that in 2024 the volume of global demand for the corresponding precious metal would reach 1.2 billion ounces, which is the second-highest level in the entire history of observations. The mentioned Institute is a non-profit international association, which includes representatives of the silver industry, in a comment to the media stated expectations that this year will be terrific for silver, especially in terms of demand.
The specified precious metal is traditionally used for industrial purposes. Silver is being applied in the manufacture of automobiles, solar panels, electronics, and jewelry.
Randy Smallwood, CEO of Wheaton Precious Metals, said during a conversation with media representatives that silver moves with gold, but later. According to the expert, after the rise of gold, the upward movement is demonstrated by silver.
Earlier, we reported about the buying of gold in times of inflation.
