On Tuesday, gold prices reached a record high. Two primary factors are driving up the price of gold, according to news agency Reuters. On the one hand, the market has long been roiled by reports that the Federal Reserve will ease monetary policy, and investors are once more looking to gold as a safe haven asset due to geopolitical unrest.
In the Asian market, there is currently a significant and growing demand for gold. However, gold is being purchased by central banks in many different nations as a safe haven. They have purchased more gold than they have sold in the previous eight months. Tuesday saw a 0.9 percent increase in the spot price of gold to $2,141; however, it later dropped to $2,130. The price of an ounce of gold peaked in December 2021 at $2,150.
According to independent analyst Ross Norman, the price of an ounce of gold will reach $2,300 this year. According to him, there is little doubt that the Federal Reserve will lower interest rates, which will lead the gold market to move in that direction and drive up the price to this point. It’s possible that gold prices won’t reach this level in the coming weeks, but they will most likely reach $2,300 in the following six months.
In the meantime, exchange-traded funds backed by gold are another significant market for the metal. However, over the last few days, index ETFs have decreased. The biggest gold-backed ETF in the world, the SPDR Gold Index, has dropped 7% so far this year.
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In the spot market, silver is becoming more expensive in addition to gold. The run began on Monday, and the most recent price of silver, at $23.94 per ounce, was the highest since December 28.
Analysts believe that in this scenario, the price of metals such as silver is rising in addition to the price of gold. For this reason, they believe that the current trend of rising gold prices will be sustainable.
Any commodity’s price fluctuation is determined by supply and demand. However, consumer behavior is added in the case of gold. People lose faith in money if they believe that inflation will rise in the future. This is because rising inflation lowers the purchasing power of money. Then, it is believed that certain non-perishable goods should be purchased and stored.
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Since the amount of gold produced by gold mines isn’t always consistent, consumer behavior—rather than the relationship between supply and demand—is more significant in this situation. Even though developed country inflation is currently declining, gold’s appeal has increased due to the possibility of a policy rate cut.
