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Gold could top record $2,300 an ounce on concerns over the global economy

Business and Finance

The price of gold has been close to the all-time high of $2,075 an ounce in the past few days and could rise above a record $2,300 amid the ongoing banking crisis in the US and the changing rhetoric of the Federal Reserve System (Fed) towards a pause in rate hikes.

Gold could top record $2,300 an ounce on concerns over the global economy

Gold prices are actively growing on Thursday and are approaching a historical maximum on the results of the May meeting of the Fed and fears of the global economy. Quotations of June contracts for gold on the New York Comex exchange on Friday evening rose by 1.1% to $2,059 per troy ounce.

The historical record for closing trading was set on August 6, 2020 and is 2069, $40 an ounce, according to Dow Jones Market Data.

"A series of economic concerns, declining US Treasury yields and a weak dollar have allowed gold to shine again," said Haralampos Pissouros, senior investment analyst at XM.

Gold was also supported by the fact that the Federal Reserve System (Fed) removed the words about the need to further strengthen monetary policy in a press release following the results of the May meeting.

Fed Chairman Jerome Powell said during the press conference that the decision on whether the Fed should pause the cycle of policy austerity will be made at the June meeting. maximums. We expect gold to go higher – our target for the summer is $2,250-2,300 per ounce,” predicts Russian analyst Evgeny Loktyukhov.

The bankruptcy of three US regional banks also prompted investors to turn to the yellow metal, which is as a store of value in times of uncertainty. World Gold Council (WGC) chief market strategist John Reid noted that the possibility of gold growth will depend on whether investors see signs of a worsening banking crisis, confidence that the US Federal Reserve will start cutting rates, and a weakening dollar.

Stimulates the rally and renewed demand for gold in China. According to the China Gold Association (CGA), demand for the yellow metal in China increased by 12% in January-March after the lifting of covid restrictions.

Gold has been in a rally since November 2022. Then the quotes were at the level of 1650 dollars per ounce. The revival of growth was facilitated by noticeable purchases of the precious metal by the central banks of the countries of the world, which wanted to balance their dependence on the US dollar. According to the WGC, the demand for gold by the banking sector in 2022 was a record for the entire history of observations and amounted to 1136 tons.

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