Gold set a record again; Why have big investors turned to buying precious metal?

Gold set a record again;  Why have big investors turned to buying precious metal?

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Chosen analytical news site (Entekhab.ir):

Euronews: Gold prices have risen over the past few months due to rising inflation in the United States as well as geopolitical risks. But what is the reason for this price increase and why have big investors turned to this precious metal?

The price of gold reached an all-time high of $2,266.6 per ounce on Tuesday (April 2). The increase in geopolitical uncertainty, especially after the recent Israeli attack on the Iranian embassy in Syria, has once again led investors to rush to a safe asset, gold.

Gold purchases by some major central banks, such as the US Federal Reserve, the Bank of England and the European Central Bank, have increased dramatically as they try to cut interest rates.

Benzinga analyst Piero Singari says despite concerns about higher-than-expected inflation in recent months, the U.S. Federal Reserve remains committed to cutting interest rates by 25 basis points in three steps.

Jerome Powell, the head of the US Federal Reserve, has made fresh comments, according to which interest rates are expected to be cut by early June.

In its March meeting, the Board of Directors of the Bank of England did not vote to increase interest rates, unlike previous meetings.

AJ Bell chief investment officer Ross Mold said various factors could affect the price of gold, including “the rate of inflation in the United States or central banks buying gold, as well as investors pouring into the gold market.”

He added: “The divergence between the price of gold and the rate of interest of American banks is astonishing and shows that the commodity and bond markets are growing at the rate of inflation, a message that is not at all to the liking of the stock markets.”

Mr. Mold also admitted: “This may convince some investors to once again turn to investing in the gold market.”

China and India are the biggest consumers of gold, especially jewelry. In 2023, the People’s Bank of China bought about 225 tons of gold, bringing its total reserves to 2,235 tons.

All Federal Reserve interest rate expectations; Why is gold constantly breaking price records?

On the other hand, according to the report of the World Gold Council in 2023, the demand for buying gold jewelry in India reached about 562.3 tons.

“Given the stock market crash, gold is one of the few safe and reliable investments,” said Ross Norman, CEO of MetalsDaily.

The expert says that in January, 271 tons of gold were withdrawn from the Shanghai Gold Exchange, in addition to large shipments from the West to the East, but none of these alone could have caused the increase in gold prices in recent months.

“The level of demand for gold in China is not clear and reports are often anecdotal,” says Mr. Norman. “Some import entry centers to China, such as Hong Kong, are strictly controlled, but there are also routes where the level of control is less.”

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