Gold hits a new high amid a bullish surge as attention turns to US rates

Gold hits a new high amid a bullish surge as attention turns to US rates

Eight months in a row, central banks have been net purchasers of gold.

Tuesday saw a new high for gold as momentum-driven investors continued to sell the precious metal due to global risk aversion and growing anticipation of US monetary easing.

In addition, bullion's historical safe-haven appeal and the robust physical demand in Asia and the central banks' purchases provided further support. Eight months in a row, central banks have been net purchasers of gold.

By 1540 GMT, spot gold has risen 0.8% to $2,130.79 per troy ounce, from its record high of $2,141.59.

According to StoneX analyst Ronna O'Connell, "the halving enabled this move self-fulfilling and the effect certainly drives momentum into the money."

Technical analysis suggests that gold may yet reach the Fibonacci projection level of $2,180.

"The coming days, especially with important economic data releases alongside testimony from (Federal Reserve Chair Jerome) Powell, will be critical in determining how much gold can maintain its current trajectory or whether we will encounter a period of consolidation," Alexander Zsaid Mphe, a senior precious metals trade

According to independent expert Ross Norman, gold will hit $2,300 this year: "The market will start to move towards those levels since it is obvious that the Fed will lower rates. Will it occur in the next weeks?Will it not? Most likely not. However, it's likely to occur within the next six months."

Debits from gold-backed exchange-traded funds (ETFs), which constitute a significant portion of the gold market, are now on the decrease. The biggest gold-backed ETF in the world, SPDR Gold Trust, has seen a 7% decline in GLD holdings so far this year. [GOL/ETF]

Since Monday, spot silver has also increased, surpassing significant technical benchmarks. It reached its best level since December 28 at $23.94 an ounce, up 0.2%.

Ole Hansen, head of commodities strategy at Saxo Bank, said, "This shows gold is not going to go up alone right now as well as raises the possibility of more sustained growth."

Palladium and platinum, on the other hand, were down by 1.6% and 1.4%, respectively.

"Although it hasn't kept up with gold yet, platinum is still more affordable than gold. Platinum's recent increase is probably going to help it until gold prices settle, according to Hansen.

Since the beginning of the epidemic in March 2020, when it surged to a record high, the gold-platinum ratio has been at its greatest point.