The price of gold, one of the safe haven values in times of uncertainty, continues its upward trend and has now been positive for three consecutive weeks, driven by the fall in interest rates and the fear of a rebound in the ‘inflation.
The golden metal chained all-time highs during the weekthe last last Thursday, when he reached $2,685.58 per ounceaccording to Bloomberg data. Since the start of the year, up to this peak, gold has become 30% more expensive.
The reasons for this increase are, according to most analysts, the interest rate reductionboth those already undertaken and those planned in the coming months; gold purchases by central banks; and strong demand in emerging countries, particularly in China.
“Gold has appreciated in recent weeks, even after an exceptional performance this year”underlines Claudio Wewel, of manager J.Safra Sarasin Sustainable AM.
According to him, “a large part of the good performance of this precious metal is due to the higher structural demand in emerging marketsparticularly in China. »
In the case of the Asian giant, adds Wewel, “in addition to the institutional purchases of the People’s Bank of China (the central bank), demand has also increased among private investors due to the lack of viable national investment alternatives.
“Gold was one of the best performing assets in 2024”underlines Ned Naylor-Leyland, manager of Jupiter AM. According to him, its upward trend “is explained by a combination of factorsincluding “expectations of interest rate cuts and central bank purchases.”
David Kohl, an economist at Swiss private bank Julius Baer, believes that lower interest rates “Alone” does not explain the rise in goldalthough he believes that once the cycle of budget cuts begins, “the path of least resistance is upward.”
Mario Aguilar, strategist at the management company Janus Henderson, highlights one of the key points of the strong appreciation of the gold metal: the conviction of investors that gold is a protection against inflation.
“Gold may not protect in the short term, but in the long term it maintains its value. This actually protects you in the long term,” he explains.
Aguilar remembers that sovereign debt continues to increaseparticularly in the United States, and investors fear that this situation will result in a further rise in inflation.
In this sense, Javier Molina, analyst for the eToro investment platform, specifies that the drop in inflation recorded in recent months “is a relief”, but that “We must not lose sight of the risks that could arise in the future if premature decisions are made regarding rate cuts. »
“Cutting rates to avoid a recession would stimulate consumption and investment by making credit cheaper, but could generate inflationary pressuresparticularly in sectors like services,” he emphasizes.
Furthermore, geopolitical tensions in key regions for oil supply, mainly in the Middle East, “could worsen the situation, generating uncertainty and volatility in the markets.”
Although the facts show that gold continues to be seen as a safe haven against inflation, some analysts have some doubts. “Contrary to popular belief, gold does not serve (on its own) as protection against inflation”Kerstin Hottner and Andrea Gentilini, from the management company Vontobel, say this in an article.
According to him, “Multi-asset investors should go beyond investing exclusively in gold and consider gaining exposure to a broader basket of commodities.
“THE wider baskets of raw materials They constitute a better protection against inflation, a concern which is at the center of investors’ concerns these days”, they point out.
Concerning the future evolution of the price of gold, Wewel maintains that it will depend above all on the progress of the American economy.
