Gold price updates record: why investors are buying bullion en masse
6 February 09:14
The precious metals market is experiencing another surge in activity. Due to the deterioration of trade relations between the US and China, investors are buying gold en masse, which has led to a rapid rise in price. On Wednesday, the price of gold rose to a record $2,877 per ounce, a historic high. This was reported by Komersant ukrainskyi with reference to Bloomberg.
Large traders began to actively buy and transport bullion to the United States before the possible introduction of new duties. This has led to a shortage of gold in London, where reserves are traditionally kept.
Factors that influenced the rise in gold prices
The situation was affected by fears of a possible return of Donald Trump’s customs policy. The former US president announced his intention to impose a 60% duty on Chinese imports if he wins the election. Markets fear that this could trigger inflationary risks and change the monetary policy of the US Federal Reserve.
This uncertainty has prompted major market players to actively buy bullion and transport it to the United States.
Gold shortage and lack of liquidity
Due to strong demand, the London gold overnight federal funds offered rate (GOFO) rose sharply to 4.7%, although it was at zero until recently. This signals a lack of physical metal on the market. This rate also reflects the income that owners of bullion in London vaults can earn by providing their metal for short-term lease to other buyers.
According to Bloomberg, investors are facing problems withdrawing their assets from the Bank of England. Due to the frenzy of purchases, the wait to receive bullion can last more than a week.
Gold was also delivered to the depositories of the New York Stock Exchange Comex.
The mutual exchange of duties raises concerns among American investors about a possible acceleration of inflation in the United States, which fuels demand for gold.
Rona O’Connell, head of market analysis at StoneX Group, believes that financial regulators may intervene to prevent chaos.
Other precious metals are also rising in price
Not only gold, but also other precious metals are rising in price amid a weakening dollar and a negative US employment report. Silver, platinum, and palladium are showing positive dynamics as investors refocus on stable assets.
Analysts predict that with the further escalation of the trade war and the passivity of central banks, the price of gold may exceed $3,000 per ounce in the coming months.
As a reminder, in September 2024, silver reached its highest level since 2012, and gold set a then-record of $2,685.58 per ounce due to expectations of an interest rate cut by the US Federal Reserve.
