Status: 09.01.2023 12:45 p.m
At the beginning of the year, the price of gold continued its upward movement and has reached its highest level in eight months. One reason is the increasing clarity about the interest rate in the USA.
Gold prices hit their highest level in eight months on Monday. The precious metal increased in price by 0.8 percent to $ 1880.89 per troy ounce. The price recovery of the precious metal, which has been going on since November, thus continued. Last year, gold as an investment object performed significantly better than, for example, equities, despite a sharp decline since the spring.
Experts justify the recent upward trend primarily with the decline in the dollar, which makes the commodities traded in the US currency cheaper outside the USA. In addition, yields on the bond markets have fallen again since the beginning of the year, which has increased demand for gold.
Less aggressive US interest rate support
So gold remains interest rate sensitive – rising interest rates are generally poisonous for non-interest bearing investments as they become less attractive than interest bearing investments such as bonds. But since late last year there has been increasing clarity about the US Federal Reserve’s (Fed) interest rate rate. After the monetary watchdogs signaled a slower pace after seven interest rate hikes, the markets are expecting a possible end to the upward trend this year or next.
And while the development of interest rates has recently receded into the background as a negative factor, the accumulation of critical geopolitical developments remains, above all the Ukraine war, which has many investors looking for supposedly safe havens.
Finally, the international central banks recently attracted attention as a powerful demand factor in the gold market. History shows that gold doesn’t really live up to its reputation as a hedge against inflation in the medium to long term. However, the relative stability of the precious metal was one of the reasons given by the central banks for storing substantial amounts of gold again last year. Overall, the central banks asked for more gold than at any time since 1967.