(BFM Bourse) – The precious metal is approaching 2,000 dollars, the turmoil on the market having led investors to take refuge in this asset.
The “barbaric” relic, as the great economist John Maynard Keynes called it, is about to have a good week.
As equity markets tumbled on fears of a banking crisis, gold has risen sharply in recent sessions.
Since the start of the panic in the sector last Friday, an ounce of gold has taken more than 6% trading at 1,956.1 dollars, around 3:15 p.m. this Friday, according to Marketwatch prices.
Gold prices largely depend on the evolution of interest rates. Gold does not produce income, such as dividends or coupons. The increase in rates thus undermines the arbitration which consists of investing in gold rather than investing cash and therefore receiving interest.
The big beneficiary
However, fears about the banks have led the market to hope that central banks will mark a pause in raising key rates or at least that they will slow them down. In particular at the level of the Federal Reserve (Fed), which will hold its monetary policy meeting next week.
“The precious metal is arguably the biggest beneficiary of the current financial crisis, as it is on course for its best weekly performance since November last year. Gold traders know there is still plenty unknown events, and gold is the perfect alternative for hedging,” said Naeem Aslam of Zaye Capital.
Craig Erlam, from Oanda, noted on Thursday evening that gold is benefiting from a “rush” on assets deemed safe such as gold, therefore, but also government bonds.
“The question traders are asking is whether fear is now embedded in people’s minds. [du marché, NDLR]which means that the returns [donc les taux d’intérêt, NDLR] could decline when/if the dust settles, which could be a short-term liability for gold, or if the turbulence is just beginning,” he continued.
The market intermediary estimates that new tensions could allow gold to break the bar of 2,000 dollars an ounce.
Julien Marion – ©2023 BFM Bourse