Gold once again confirms its status as a safe haven. The yellow metal reached a record again on Wednesday, due to the strengthening of geopolitical risk in the Middle East but also the weakness of the dollar and the yen.
Around 7 p.m. GMT (9 p.m. in Paris), the price of an ounce of gold soared 0.74% to $2,296.61, shortly after reaching $2,298.91, a new historic high. The price of the precious metal has increased by more than 7% in recent days.
Massive purchases by central banks
Bullion “benefited from the weakness of the US dollar and an increase in geopolitical tensions”, summarizes Frank Watson of Kinesis Money. For Shaun Osborne, chief strategist for the foreign exchange market at Scotiabank, we are also seeing strong purchases by central banks, which are increasing their gold reserves.
The Russian Central Bank in particular is a major buyer, having increased the share of gold in its reserves to 24.5% compared to 20% in 2020. This rise in the power of gold associated with dedollarization is motivated, among other things, by international sanctions after the invasion of Ukraine.
On the geopolitical front, fear of an escalation of the conflict in the Middle East also leads investors to seek safe haven values, such as gold and raw materials. On Monday, a raid attributed to Israel targeted the building adjoining the Iranian embassy in Damascus in Syria, inflicting at least 13 deaths, including seven Iranian soldiers, and raising fears of an escalation of the conflict.