Gold nears all-time high as investors scramble for safety

Onome Amuge

Amidst the turmoil of global financial markets and geopolitical strife, gold has become the apple of investors’ eyes. The yellow metal’s price soared to a new high of over $2,100 per ounce, tantalisingly close to its record-breaking peak. 

The shift to an easing monetary policy by central banks is also bolstering demand for gold. 

A number of factors have boosted demand for gold, including signs of a slowdown in the U.S. economy, recession fears in Europe and Japan, and underwhelming growth forecasts from China. With these economic headwinds, investors have sought the relative safety of gold. 

Spot gold prices rose slightly to $2,118.59 an ounce, while gold futures for April delivery held steady around $2,126.75 an ounce. Both spot and futures prices closed above $2,100 an ounce for the first time ever on Monday, and now hover close to all-time highs. Spot gold hit a record high of $2,135.72 an ounce in August 2020, while futures hit a record high of $2,130.20 an ounce in August 2011.

But the rally in gold prices may have reached a turning point, as investors await more signals from the U.S. economy. There are also speculations that key data on the labour market and comments from the Federal Reserve later in the week could influence the direction of gold prices

Gold’s upward trajectory was also constrained by expectations of further signals on U.S. interest rates, particularly from Federal Reserve Chairman Jerome Powell this week. Powell is due to testify before Congress on Wednesday, and market participants are bracing for a continuation of his hawkish tone. 

High U.S. interest rates have been a major headwind for gold prices, as they make the non-yielding metal less attractive relative to other assets that offer a return.

While gold prices have seen some fluctuation, other precious metals have also seen some volatility. Platinum futures declined 0.7 per cent to $896.60 an ounce after briefly surpassing $900 an ounce. Silver futures climbed 0.2 per cent to $24.040 an ounce. Palladium, which has seen steep declines this year, remained under pressure, declining 2.5 per cent to $1,793.30 an ounce.