Why did gold update the historical maximum
For the first time in history, gold quotes for the spot market rose above the level of $ 3 thousand per troika ounce. The game of raising the precious metals in the market was activated against the background of increasing tension due to the US trade confrontation with Europe. As a result, the volume of assets of exchange funds investing in gold was updated by a long -term maximum. Analysts do not exclude price growth to $ 3300–3500 per ounce, provided that the deglobalization is further strengthened, as well as a decrease in the Fed’s rate.
According to data Investing.comon Friday, March 14, the quotes of gold in the spot market reached $ 3004.95 per ounce, thereby establishing a new historical maximum. The game for the increase resumed at the beginning of the week, during which time the quotes increased by 3.4%. Since the beginning of the year, gold has risen by almost 14%.
The update of the record mark is associated with the escalation of tension in the field of international trade. The new round of exacerbation was a “war of duties” between the USA and the EU.
So, the European Commission (EC) Gathering Introduce duties on American goods with a total volume of € 26 billion in response to American duties in the amount of 25% for European steel and aluminum, which began to operate on March 12. In particular, EC is considering the possibility of introducing 50 percent tariffs to American whiskey. In response to this, US President Donald Trump has already announced his readiness to introduce 200% of the duties on alcohol from France and other EU countries.
The escalation of trading disputes initiated by US President Donald Trump may have detrimental consequences for the global economy, the head of the ECB, Christine Lagard, said on March 14. Moreover, the economies of all participants in such wars, including the American one, will suffer. Mikhail Shulgin, the chief analyst of the Center for Investment Analytics of Rosgosstrakh Life, draws attention to the fact that the expectations of a significant slowdown in economic growth in the United States or the introduction of the economy into a recession led to correction in the American stock market. On March 13, the S&P 500 index dropped to 5500 points, a minimum from September 11, 2024. Even taking into account the rebound on Friday, to the mark of 5610 points, the index remains 8.7% lower than the historical maximum established on February 19. In such conditions, investors traditionally increase investments in protective assets.
According to Bloomberg, from March 10 to 13, stock fund assets (ETF) investing in gold have grown by almost 10 tons, to 2.69 thousand tons, updating the maximum of November 2023. Since the beginning of the year, their assets have grown by 110 tons.
Previous metal purchases are also discussed by Emerging Portfolio Fund Research (EPFR). According to Kommersant, based on the Bank of America reports (takes into account EPFR data), from the beginning of the year to March 12, the volume of net investment in gold funds has exceeded $ 13.7 billion, and only in the last four weeks the influx amounted to $ 9.8 billion.
Such investments in the USA and China are growing most intensively. According to the world's largest SPDR Gold Shares gold fund, only in the last three weeks its assets have increased by almost 43 tons, exceeding 905 tons. The World Gold Council data indicates a sharp increase in the assets of Chinese analogues. In February alone, such funds increased assets by 21 tons, to 131 tons. “Investors in the PRC and as a whole in Asia are concerned about the negative impact of American tariffs on the Economy of the Celestial Economics, which additionally warms up the demand for safe assets,” says Mr. Shulgin.
In such conditions, experts do not exclude further rise in gold prices, both due to preserved geopolitical risks and for technical reasons.
“Punching an important psychological level of $ 3 thousand per ounce can cause acceleration of quotation growth due to the massive influx of investors who want to“ jump into a runaway train, ”said Astero Falcon Astero Falcon. It does not exclude the fact that this year prices will be able to test the levels of $ 3100-3200 per ounce. Mikhail Vasiliev, chief analyst of the Socialist Republic of Council of People's Commissars, does not exclude prices for $ 3300–3500 per ounce. “Trade wars, strengthening deglobalization, reducing the Fed’s rate – these factors will continue to support gold prices this year,” Mr. Vasiliev said.
However, as further prices, negative factors will intensify. First of all, the drop in the demand for metal from industry, led by a jewelry industry, as well as such major buyers of recent years as central banks and private investors. “Central Banks, jewelers and private investors have already reduced purchases, which can limit further impulse. China, which was one of the largest buyers of gold, also acts more carefully, ”said Mrs. Nikolaeva. Upon maintaining high growth rates, in her opinion, sales of speculators may begin in order to record profits.
