WGC: Gold price peaks in different periods
Gold ended March with a gain of 9.9% at $3,115 per ounce, leaving another month behind with a set of new records. Even a significantly weak US dollar, primarily through the strong euro, could not prevent the brilliant result of the gold price in all other major currencies, experts at the World Gold Council (WGC) believe.
"The strengthening of the euro and the weak US dollar have once again become a key driver of gold's dynamics, along with rising geopolitical risks and concerns about Trump's tariff revolution," the WGC emphasized.
Gold purchases in ETFs did not slow down in March. American funds led the way with $6 billion (67 tons) of net inflows, followed by Europe, then Asia. While ETF flows were positive, COMEX futures volumes decreased slightly by $400 million (5 tons), probably due to profit-taking.
Where Liquidity comes from matters, and it has supported both financial assets and the U.
S. economy for most of the post-COVID period.
However, in 2022, financial conditions in the United States have become dramatically more difficult as liquidity has withdrawn from the markets. This perfect storm caused a very rare annual massive drop in bonds and stocks. Gold held on, but still experienced some resistance.
Today, the market is at a similar impasse in terms of liquidity conditions, but with significant differences that can continue to support gold.
"The only obstacle is the strong price increase, which practically does not stop. Comparisons with the peaks of 2011 and 2020 will be made later, but for now, in our opinion, the environment is conducive to further growth," the WGC experts note.
The role of the United States During and after the Covid-19 pandemic, US fiscal and monetary policy contributed to the creation of new jobs at the expense of government and government-related structures. Capital markets have also been supported by liquidity coupled with continued "monetary assistance" from the Fed.
These sources of liquidity began to wane in 2022, coinciding with a massive downturn in the bond and equity markets, as already mentioned. Gold also sank by 20% in two quarters in 2022, but then recovered and ended the year at the same level.
"It is difficult to prove a direct cause-and—effect relationship, but this suggests that markets and the economy are used to support," the WGC emphasized.
Most of the market unrest in early April was centered around tariffs, but liquidity risk remains an important hidden factor. "And we believe that we are now approaching an impasse similar to the one that the markets experienced in 2022," the experts noted.
The upcoming liquidity depletion will be different from 2022:
- Inflation in 2022 was