Gold continues upward climb, scaling one-year high racing past $2,000 an ounce
Gold prices have surged past $2,000 an ounce, scaling one-year highs, as the US dollar and yields weakened. This follows weaker-than-expected US economic data, which reinforces bets for a slowdown in the pace of interest rate hikes despite growing concerns over inflationary pressure caused by rising oil prices. The price of gold rose by 1.7% to $2,017.92 per ounce and silver by 3.8% to $24.91 per ounce, while palladium was up 0.3% at $1,456.05. Meanwhile, platinum rose 3.3% to $1,017.91.
David Meger, director of metals trading at High Ridge Futures, explained that “we’re in this very positive backdrop for gold in which we have the slowing of economic data along with inflationary pressures remaining elevated”. This provides an ideal scenario for gold, which is typically considered a go-to inflation hedge. Furthermore, the unexpected output cut by OPEC+ has helped to bolster the price of gold, allowing it to shake off the usual pressure from the likelihood of interest rate hikes.
Looking ahead, precious metals dealer Alexander Zumpfe at Heraeus predicts that “from a technical perspective, the gold price is likely to remain strong and stabilize at its current level or even higher. The $2,050-mark could act as an important resistance level, and if breached, prices could quickly soar towards its all-time high”. The market is now expecting a 43% chance of a Federal Reserve rate hike by a quarter basis point in May, with a 57% probability of a pause.