Gold prices surged to new record highs on Tuesday, defying traditional market indicators that typically suppress its value. The rise comes amidst a confluence of factors, with some analysts scratching their heads at the unusual rally.
Spot gold climbed 0.5% to a staggering $2,262.51 per ounce by 10:55 GMT, having previously reached an all-time high of $2,266.59. This marks the third consecutive day of record-breaking prices for the precious metal.
Analysts attribute the surge to a combination of factors. Increased demand from retail investors and central banks is bolstered by “momentum-following speculators,” who are capitalizing on the recent price uptick. Additionally, ongoing geopolitical tensions are seen as adding fuel to the gold fire.
March saw gold surge by a remarkable 9.3%, marking its strongest monthly growth since July 2020. This growth is attributed to persistent demand for safe-haven assets and central bank purchases, with China’s central bank actively adding to its gold reserves for the past 16 months.
However, the rally seems counterintuitive. A strong U.S. dollar, typically a headwind for gold, and rising U.S. treasury yields, indicating the possibility of higher interest rates, should theoretically suppress gold prices.
Independent analyst Ross Norman highlights this unusual scenario, stating, “The gold rally is so unusual…it’s occurring despite significant traditional headwinds.”
Despite the record prices, European investors are reportedly selling gold back to dealers, and demand from India, a major gold consumer, has significantly weakened.
The rally extends beyond gold, with other precious metals like silver, platinum, and palladium also experiencing price increases.
