According to an article by S&P Global Commodity Insights, the London Bullion Market Association gold pricing closed at a record high of US$2,116/oz as 4 March 2024, driven by speculation around US interest rate cuts, investors hunting for haven assets, and a period of exceptional buying by central banks and Chinese investors.
The article notes that last month, gold prices ended a 61-day streak of hitting US$2,000/oz. Prices briefly dropped below the US$2,000/oz mark after news of skyrocketing US inflation, but the precious metal has since rebounded, with its closing price rising 6.3% from 14 February to 4 March 2024.
Gold prices have experienced surges over the last few years, due to the COVID-19 pandemic, and waves of geopolitical and economic uncertainty. However, prices always failed hold above US$2,000/oz mark for more than a few days.
“Gold resumed Friday’s rally right after the US opening. The strong gains achieved for the rest of the day were fueled by US participants,” James Steel, chief precious metals analyst at HSBC Global Research, wrote in a 4 March note to investors. “The cornerstone of the rally appeared to be increased sentiment favouring a June Fed rate cut.”
Looking ahead, industry observers are forecasting an unstable year for gold prices. The political turmoil between Russia and Ukraine and in the Middle East will push safe-haven buying patterns.
Meanwhile, central banks are “still wavering between dovish and hawkish stances as economic data emerges,” Aude Marjolin, an S&P Global Commodity Insights research analyst, noted in a Commodity Briefing Service report last month.
Daria Efanova, Sucden Financial’s head of research predicted for S&P, that as the yellow metal becomes overbought, a downward correction would cut the bullion price to around US$2,050/oz. Conversely, a TD Securities analysts noted that further upside in gold could be prompted if the price rally can exceed US$2,139/oz, as algorithmic flows appear to be the main driver moving precious metals markets. Gold investors will be eyeing the Federal Reserve’s moves this week for news on interest rate cuts as chair Jerome Powell testifies before congress on 6 and 7 March 2024.
