En December, as the mercury fell, gold heated up. The Christmas tinsel is now extinct, but the gold continues to sparkle in the markets. At the start of the new year, the golden metal remains very popular. It is currently trading at nearly 1,840 dollars (1,746 euros) an ounce. To be compared with 1,650 dollars an ounce at the end of October.
It is therefore still the party, in January, for the owners of ingots and other Napoleons. But for how long ? More than ever, feverishness reigns on the markets. Almost three years after its unexpected eruption, the coronavirus continues to cause bouts of fever and anxiety. The sudden decision taken by China, at the end of 2022, to end its zero Covid policy, yet long considered a model by its promoter, President Xi Jinping, has revived speculation.
Will this country, the world’s biggest consumer of raw materials, regain its pre-health crisis appetite? Will its economy regain a sustained cruising speed after the “stop and go” of repeated confinements? These questions are buzzing in the trading rooms.
Speculative surge
Another hot topic that feeds the conversation: the situation in Ukraine and the strategy of Vladimir Putin. The invasion of this country by Russian troops at the end of February caused commodity prices to soar. Gold had not escaped this speculative surge. At the beginning of March, the yellow metal had gone into incandescence to exceed the bar of 2,000 dollars per ounce. Before retreating as metals, energy and also cereals did.
In this uncertain context, gold benefits from its status as a safe haven. A status disputed by the dollar. The fate of gold depends on the strong dollar. However, the greenback is benefiting from the strict monetary policy of the American Federal Reserve (Fed). Anxious to intensify the fight against inflation, central bankers in Washington have repeatedly raised their key rate in 2022. A policy that has strengthened the greenback and dented the value of precious metals. The rise in rates makes US government bonds more profitable, and reduces the attractiveness of gold accordingly. But, at the same time, many central banks have chosen to strengthen their gold reserves. An element favorable to the yellow metal.
Friday, January 6, according to the arbitrations, the dollar overshadowed gold. But the yellow metal pulled the kings and won the bean. The price of its great rival, palladium, has melted to 1,750 dollars an ounce, enough to make it lose its title of most precious metal. On this day of Epiphany, gold regained its crown…