Why does gold keep breaking historical records?

Geopolitics and Fed expectations at the heart of gold’s rise

Gold continues to captivate investors’ attention by breaking new all-time highs. Last Monday, the price of an ounce of gold reached $2,450, before falling slightly to $2,350 on Thursday evening.. At the same time, silver is also experiencing a meteoric rise, reaching more than $30 per ounce, a level not seen since 2012.

The surge in prices of these precious metals can be explained by an alignment of geopolitical and economic factors. Tensions in the Middle East, the anticipation of a cut in interest rates by the American Federal Reserve (Fed) and sustained demand from central banks and Chinese consumers are all driving forces for these increases.

The death of Iran’s president in a helicopter crash has intensified concerns about stability in the Middle East. This incident was followed by the attack on an oil tanker in the Red Sea by a Houthi missile, further increasing regional uncertainty.

Additionally, expectations of interest rate cuts by the Fed have been fueled by a slowdown in inflation in the United States, encouraging investors to turn to gold. Although Commerzbank analysts remain skeptical about the impact of rate cut expectations, they acknowledge that geopolitics plays a major role in the current gold market dynamics.

Sustained demand from central banks and Chinese consumers

In 2022 and 2023, central banks purchased more than 1,000 tonnes of gold, a record level for this period. The World Gold Council highlights that this trend continues in 2024, with strong demand from emerging countries seeking to dedollarize their reserves. China, in particular, saw the share of gold in its reserves exceed 5%.

The stock market crisis and the collapse of real estate in China have also pushed Chinese consumers to invest massively in gold, despite the rise in prices. However, a slowdown in imports suggests buyers are starting to feel the effects of high prices.

Silver: a precious and industrial metal

Unlike gold, silver is also very popular for its industrial applications, notably in the manufacture of solar panels. Stagnant supply is failing to keep up with growing demand, fueled by the rise of renewable energy. Commerzbank forecasts a deficit of 6,700 tonnes for 2024, marking the fourth consecutive deficit.

In the event of an excessive surge, manufacturers could seek to substitute this metal, as happened in 2011 when prices reached $50 per ounce, leading to a drastic reduction in the use of silver in solar panels. .

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