The price of gold has updated its historical record with the support of central banks

Gold quotes on the world market consolidated above $2.2 thousand per troy ounce, reaching a new historical high. In Russia, prices exceeded the level of 6.5 thousand rubles/year, returning to the values ​​of March 2022. In many respects, the bullish play is associated with the ongoing purchase of precious metal by central banks of developing countries. Analysts believe that gold prices have a good chance of reaching $2.4–2.5 thousand per ounce by the end of the year against the backdrop of continuing high geopolitical risks and declining dollar rates.

On Thursday, March 28, the price of gold on the world market exceeded $2.2 thousand per troy ounce. According to Investing.com, spot market prices reached $2,225.3 per ounce, up 1.4% from Wednesday’s close. As a result, the historical maximum set a week earlier was updated. Even taking into account the slight correction that occurred in the evening, prices remained above $2.2 thousand per ounce. The confident rise in prices continues for the sixth week in a row, and during this time gold has risen in price by almost 12%. Since the beginning of the month alone, the price increase has been 8.8%.

At trading on the Moscow Exchange, the price of gold exceeded 6.6 thousand rubles/year for the first time in two years.

At the end of the trading session, quotes stopped around 6,655 rubles/year, which is 1.4% higher than the closing value of the previous day and 12% higher than the values ​​at the end of February. A stronger rise is facilitated by the increase in the dollar exchange rate in Russia, which has increased by 1.5% since the beginning of the month, to 92.5 rubles/$.

There is currently no significant news background for updating historical highs for gold, notes Tsifra Broker analyst Natalia Pyryeva. Moreover, the rise in prices occurs against the backdrop of the Federal Reserve’s tough position regarding further monetary policy. Last week, the American regulator, as analysts expected, kept the rate at the current level. The next decline, according to traders surveyed by the CME FedWatch Tool, could occur in June with a 68% probability.

At the same time, a growing number of global portfolio managers do not exclude the possibility that the rate will remain at the current level until next year.

“Dollar rates remain at high levels, the dollar index is strengthening, the number of speculative positions in gold has not changed over the week – these factors oppose the rise in gold prices,” notes Natalia Pyryeva.

This dynamics of quotations may be associated with the presence of large buyers in the market – central banks of developing countries. Financial regulators have already purchased 39 tons of the precious metal in January, more than double the December 2023 purchases, according to the World Gold Council. The key buyers were the financial regulators of Turkey (11.8 tons), China (10 tons) and India (8.7 tons). “Central banks of developing countries are buying gold for reserves in conditions of increasing toxicity of dollars and euros (risks of freezing as a result of sanctions), in conditions of growing geopolitical contradictions and slow global de-dollarization,” notes Sovcombank chief analyst Mikhail Vasiliev.

The ongoing geopolitical contradictions in the Middle East, as well as the deterioration of relations between the United States and China, will contribute to a further increase in the price of the precious metal, analysts say. According to Mikhail Vasiliev, in the coming months, quotes will consolidate in the range of $2.2–2.3 thousand per ounce, and by the end of the year they may reach the range of $2.4–2.5 thousand per ounce. This will be facilitated by the likely reduction of the Fed key rate at the end of the year. “As a result, the dollar will weaken, which is positive for gold,” notes Mr. Vasiliev.

Vitaly Gaidaev