Gold has continued to test, and break, records this week as the metal looks to end the month on a very strong note.
Although gold has pulled back slightly from the highs of $2,220 in US dollars, a weaker pound has kept gold high domestically, trading around £1,735 at the time of writing, just shy of the current all-time GBP high of £1,739.62 per ounce set last week.
Gold has had an exceptional March, increasing 8% and setting multiple new records.
Gold has continued to set records this week; yesterday’s LBMA gold price saw a new record high of £1,731.95 per ounce, and yesterday's spot close was also a UK high of £1,725.84. Given the strength of the March rally, it seems highly likely that these records will still be beaten before the Easter weekend.
Physical demand is driving the rally, with China believed to be one of the main countries behind the buying spree. China’s central bank has been buying large amounts of gold for their reserves, racking up 16 consecutive months of reported purchases. Retail demand also remains high; China’s stock markets and property sector have struggled in the past two years, and with a ban on cryptocurrencies, and restrictions on capital being moved out of the country, many Chinese investors have instead turned to gold to protect their savings.
Gold is currently bumping its head against the $2,200 per ounce level, and economic data from the US will continue to impact the strength of the dollar in the near-term. Signs of strong growth and employment numbers will see rate cut hopes fall, and the dollar rise. Any indication of economic weakness will feed into the narrative of the Federal Reserve cutting rates three times in 2024, pushing the dollar lower, and gold even higher.
Given the potential for gains in the latter half of 2024, forecasts of £1,800 - £2,000 per ounce seem possible, but in the near term £1,740 will represent the next all-time high following an exceptional month for gold.
