Since the beginning of the year, the price of an ounce of gold has regularly exceeded the symbolic threshold of $2,000, suggesting that the precious metal is on track to reach a new record. While a similar peak was already reached in August 2020, when an ounce reached $2,075.47, the current trend appears to be holding. Ongoing global events are causing geopolitical and economic disturbances, thus creating a synergy of factors that favor the rise of gold.
The current context brings together the main factors that usually influence the price of gold. The geopolitical crisis, particularly the invasion of Ukraine by Russia, led to gold surpassing $2,000 as early as March 10, 2022, at the London Stock Exchange. Additionally, gold is perceived as protection against inflation and currency devaluation, making it attractive to investors during times of rising inflation. Interest rates also impact the price of gold. When rates increase, gold tends to decline, but with the US Federal Reserve slowing down its rate hikes due to the slowdown in the job market, gold becomes more appealing.
The instability of financial markets has resulted in an increase in the demand for gold, especially in the jewelry sector and industrial applications. Moreover, central banks, including France, the United States, Germany, Italy, Greece, and Portugal, have increased their gold reserves during times of crisis, which has contributed to the price rise. The gold price is set by the London Bullion Market Association Gold Price (LBMA) every 15 minutes, with daily updates based on offers and demands.
Simultaneously, the price of silver is also experiencing an upward trend.
Charts indicate a phase of decline followed by a rebound in prices, and analysts predict a bullish rally with a return to $30. The increase in US Federal Reserve rates has led to a decrease in the value of Treasury bonds, weakening banks. Additionally, the political crisis in the United States and the de-dollarization of global exchanges by BRICS+ countries have contributed to the rise in silver.
In a context where the banking system faces bankruptcies, the US Treasury risks defaulting on its debt, and real estate prices collapse, precious metals such as gold and silver are considered a safeguard to preserve capital. Some even forecast a historic bullish rally for gold.