The Gold Market Hunts for Answers Behind Bullion’s Sudden Surge

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Bloomberg Nouvelles

Bullion Prices,Interest Rates,Central Bank

(Bloomberg) -- Gold’s scorching run to an all-time high may seem easy to explain from a distance, given the fractious geopolitical climate and murky outlook ...

-- Gold’s scorching run to an all-time high may seem easy to explain from a distance, given the fractious geopolitical climate and murky outlook for the global economy. The precious metal is famously seen as a “safe haven,” and the general view is that bullion prices should rise when interest rates fall — which many investors expect will happen later this year.

Profit-taking by long-term investors who bought in years ago is how Citigroup Inc. explains why net ETF inflows have been notably weak. The fact that the steady and sizable outflows haven’t had a greater impact on prices also hints at strong demand for the bars they’ve been selling — and central banks would be a natural buyer, according to Joe Cavatoni, who oversees the World Gold Council’s ETF platform.

In theory, that would be negative for gold because high interest rates dent bullion’s appeal relative to yield-bearing assets such as bonds. Investors also are pushing up the dollar, which has made gold much more expensive for buyers in the top consumer markets: China and India.That’s the big question.

The inversion of the spread may signal that nervous investors are clamoring to get hold of spot gold now, as protection against potential turmoil. Trump Media & Technology Group falls sharply. Donald Trump says he’ll prioritize the company’s Truth Social site despite doubts over its future as a social-media platform.5 Canadian Stocks to Buy and Hold Forever in Your TFSA

 

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