The gold spot price has had a solid start to the week, rising 0.6% today (15 April 2024) to $3,653.25 per ounce on the back of record highs during Q1 2024.
According to Trading Economics, this new high comes as tension increases in the Middle East due to Iran’s drone strikes on Israel over the weekend.
Iran’s counterattack has intensified concerns of a broader regional conflict, resulting in traders anxious which has pushed the precious metal’s strong demand — further exemplifying it as a safe-haven asset.
Saxo Head of Commodity Strategy Ole S. Hansen says that gold traded sharply higher on 12 April 2024, as traders reinstated a weekend risk premium, only to be setback after stocks tumbled and US treasuries climbed.
“Despite deflating a bit on Friday, crude prices already included a risk premium and the extent to which it will widen further depends almost exclusively on developments near Iran around the Strait of Hormuz.
Gold, meanwhile, has a major risk premium priced in already, having recently rallied strongly despite USD and bond yield strength. With that in mind, the metal may struggle to regain last week’s strong momentum before going through a long overdue consolidation.”
Today’s higher gold price comes on the back of a strong quarter, as this news service previously reported.
The World Gold Council reports political events such as the latest tensions in the Middle East are likely to have further implications on the gold price throughout this year.
The gold price high comes just before India goes to the election polls this week, which the World Gold Council says is likely to result in little market activity during the next six weeks.
The World Gold Council has released its Market + ETF flows reports for March, which saw gold rise 8.1% by month-end, to US$2,214 an ounce, driven by heightened risks and positive momentum.
The council says this has swelled year-to-date gains, aided by growing geopolitical risk, continued central bank demand, and resilient gold consumer buying.
With gold reaching all-time highs, most would assume a crowded ETF market, yet gold-backed ETF investment remains low.
The World Gold Council, however, says that evidence points to more potential buyers than sellers, and suggests that returning North American flows and a softening in European outflows may hint at a turning point. Potential catch-up allocations could provide additional support for gold, looking ahead.
As Mining.com.au previously mentioned gold had a strong first quarter of 2024 as the world witnessed the metal reach all-time highs in March at $3,259 per ounce and the World Gold Council says the precious metals physical supply constraints mean that the price has to do heavy lifting to maintain a sensible share of assets.
Write to Aaliyah Rogan at Mining.com.au
Images: Great Boulder & ABC Bullion
