The current trading week looks to be quite successful for gold buyers. The yellow metal has risen in value by $25 in recent days alone, surpassing the psychological level of $1,900 per troy ounce. Since the beginning of May, gold has managed to add $150 to its value, which amounts to 8% profit. Among the key drivers of increased demand for gold are growing inflationary risks, declining dollar and the continuing collapse of the US debt market. The 10-year government bond yields fell below 1.6% on Tuesday. This happened for the first time in nearly a month.
It’s worth noting that a decline in Treasury note yields supports gold quotes since it reduces the opportunity costs when investing in assets that do not generate interest income. Gold is among these assets. Market players also link growth in the value of gold with a significant drop in the digital asset sector. A while ago, experts were constantly comparing BTC to gold, calling it a new alternative to safe-haven assets that can be used to hedge against risks. But as we could see by the recent events when BTC demonstrated a rapid downtrend, gold managed to prove to all skeptics that it is still the best hedge asset. In this regard, the investment position in gold began to grow again, while the cryptocurrency market suffered a strong reputational blow as many investors concluded that cryptocurrencies cannot yet be seen as a full-fledged source of capital preservation because they are easily affected by the decisions of one person.
Today, interest in gold keeps growing exponentially. The Commodity Futures Trading Commission (CFTC) released its numbers, where gold speculative net positions rose to 198.9 K from 192.3 K a week earlier, almost reaching 200 K for the first time since February.
In addition, the World Gold Council (WGC) published its traditional report on gold purchases in April. According to this report, gold purchases were registered even in the countries that have not been involved in it before. So, Japan has increased its gold reserves to 846 tons, having bought 80.8 tons. Hungary bought 63 tons of bullion in April, increasing its gold reserves more than 3 fold. Turkey bought 12.9 tons of precious metal, India - 7.5 tons.
Active gold purchases by institutions may be caused by growing inflationary pressures in the US, which causes a decline in the US dollar. Goldman Sachs experts expect the US core consumer price index, which doesn't include volatile food and energy prices to peak at 3.6% in June against the current 3% and remain at 2.7% in 2022. Unsurprisingly, against this backdrop, the gold value, a classic hedge against the risk of currency depreciation, is rising.
Analysts at AMarkets believe that gold may rise to $ 2,000 in the next 3 months. If you want to make money trading gold, you need to use the services of a reliable global broker. For example, you can consider AMarkets, a regulated broker which protects traders' interests for up to €20,000.
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