Gold has once again become the new desire of financial market investors, replacing Bitcoin – Biz Magazine

The beginning of the year was of crypto-assets and actions in the field of AI, but now, it seems that the markets have rediscovered precious metals, Claudiu Cazacu, strategy consultant at XTB Romania, a trading and investment company on international scholarships.

Although Bitcoin started the year strong, carving broad paths to all-time highs after a 50.1% advance through April 3, the currency subsequently slowed so much that it gave way to gold as the leader of the race. In the last month, Bitcoin’s advance is 5%, compared to gold’s 9.7%.

Gold hit record after record in March. As of the morning of April 3, its year-to-date advance is 10.7% and futures for December delivery are nearly $100/ounce above the spot price, a sign of bullish investor expectations, shows Claudiu Cazacu.

The price has gone up

The price even rose in some sessions where US Treasury yields rose. Speculative appetite is, in the short term, relatively high, and this does not rule out temporary vulnerabilities. The alignment of macro and geopolitical risk factors keeps, however, in the distant horizon, the interest of investors, and not just speculators, for the most famous precious metal.

The precious metal has engaged in a series of historical highs, the evolution being, at the same time, a signal of changes in attitude for fundamental reasons and an indicator of a state of mind, Claudiu Cazacu says.

There are various economic arguments for gold’s appreciation, but the breaking of some records has also attracted increasing speculative interest from traders who detect the likelihood of rapid moves. The geopolitical scene is one of the reasons for the acceleration, with attention divided between Ukraine, the Middle East and Taiwan. Meanwhile, the attack on the Iranian embassy in Damascus prompted an “upward” reassessment of the risk of conflict with Iran.

Although US economic data is relatively upbeat, with better-than-expected growth in orders and the ISM manufacturing indicator, indicators in the inflation and consumption areas are lining up to allow for three interest rate cuts by the Fed this year. The lower the interest rates, the less penalized is holding gold, compared to cash placed in banks.

The price of oil, rising

On the other hand, Brent crude rose to its highest level since November last year and has rallied 17.5% this year. If the trend does not prove to be transitory, the process of rate cuts – which both gold traders and equity investors are currently banking on – may be slower than currently expected.

A risk to oil also comes from deteriorating relations between Iran and Saudi Arabia, while Mexico announced a cut in exports by 0.4 million barrels per day to support local refineries.

The synchronized movement of gold and oil confirms the complicated geopolitical landscape, and central bank communications may continue to hint at an ultimately data-driven interest rate path – thus more volatile and less stimulative than they would like to see at present , investors, emphasizes the strategy consultant from XTB Romania.

Central to setting the price of gold is China, which, according to Franco-Nevada’s Pierre Lassonde, takes such a large share of annual production that it ultimately decides the price. The appetite for gold purchases by some central banks, especially that of China (which reached 2,235 tons after buying 225 tons last year), was one of the drivers of the upward trend.

At the same time, a whopping 271 tons were withdrawn from Shanghai Stock Exchange warehouses in January. This move could show effervescent local demand. Other voices quoted by Euronews suggest shipments of gold by specialist operators, flowing from the West to the East. Diversification of central bank reserves is doubled by individual appetite for gold in emerging countries.

And the price of silver is rising

For its part, silver is up 10.4% this year, but is a long way from all-time highs. Its profile is different, having a much stronger industrial use. According to the Silver Institute, demand is expected to hit a record 690 million ounces in 2024, up 4% from last year’s figures, driven by demand for solar power and electric vehicle production.

Silver price movements tend to be occasionally “violent”, but there can be long waiting periods in between. A TD Securities analysis, however, describes a structural supply shortage, with too little investment in new mines, which could see a reset in market perceptions over the next 1-2 years.