Gold prices surged to new heights on Monday, marking the seventh consecutive session of record peaks. This impressive rally comes amidst robust demand from key central banks in Asia, a trend that analysts believe is offsetting traditional challenges posed by a strengthening U.S. dollar and heightened interest rates.
At 1002 GMT, spot gold climbed by 0.3% to $2,335.70 per ounce, reaching an all-time high of $2,353.79 earlier in the session. Similarly, U.S. gold futures saw a 0.4% gain, settling at $2,354.70.
Analysts, including Han Tan, the chief market analyst at Exinity Group, attribute the latest surge in gold prices to signals from the People’s Bank of China (PBoC). The PBoC’s sustained buying spree of the precious metal, now spanning 17 consecutive months, underscores its commitment to bolstering gold reserves. Official data released on Sunday revealed that China’s gold holdings had increased to 72.74 million fine troy ounces by the end of March, up from 72.58 million ounces in February.
Tan emphasizes the pivotal role played by central banks across the globe, particularly the PBoC and the Reserve Bank of India, in accumulating gold reserves. This concerted effort by central banks to shore up their holdings is seen as a major catalyst propelling spot gold prices to unprecedented levels.
As the record-breaking streak continues, market observers remain attentive to the evolving dynamics, balancing the bullish sentiment fueled by central bank demand against the headwinds posed by currency fluctuations and interest rate adjustments.
Gold has demonstrated remarkable resilience this year, surging by over 13% despite facing headwinds from robust U.S. economic data and speculation that interest rate cuts may be delayed until after June.
According to independent analyst Ross Norman, this upward trajectory in gold prices could be attributed to two primary factors. Firstly, central bank program buying may be driving the market, reflecting a strategic move to bolster reserves. Alternatively, option buying, characterized by a disregard for market fundamentals, could also be contributing to the bullish sentiment.
In line with this bullish outlook, UBS has revised its year-end target for bullion to $2,250 per ounce. The upward revision is underpinned by expectations of stronger demand, particularly with an anticipated increase in exchange-traded-fund (ETF) buying in the coming months.
Despite the robust performance of gold, non-official physical demand in India has remained subdued. The soaring domestic prices have deterred buyers in this price-sensitive region, while premiums have remained steady in China, the world’s largest gold consumer.
In tandem with gold, other precious metals also saw gains. Spot silver rose by 1.1% to $27.77 per ounce, platinum climbed 1.2% to $937.90, and palladium increased by 0.9% to $1,012.10.
Sources: moneycontrol.com
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