After a big fall of one day, the prices of gold and silver are again on sky high. Today, on the morning of Friday, January 23, gold prices reached a record high in the domestic futures market. The increase in geopolitical and economic risks and the weakness of the US dollar has increased the demand for safe assets. February futures prices of gold on MCX jumped by almost Rs 2,900, or about 2%, to reach a new record high of Rs 1,59,226 per 10 grams. At the same time, the price of March futures of silver on MCX increased by more than Rs 12,600 i.e. about 4% and reached Rs 3,39,927 per kg.
Gold prices rise in international market
Gold has set a new record by reaching close to $ 5,000 an ounce. Geopolitical threats and threats to the independence of the Federal Reserve have fueled the rally, which was triggered by outflows of money from currencies and bonds.
impact of dollar weakness
Bullion hit a new record high of $4,960 in early trading and is on track to gain more than 7% this week. During this period, silver also made a record. A key index of US dollar strength has declined 0.8% this week. The weakening of the dollar makes gold cheaper for most buyers.
Investor activism and the role of the Fed
Coming off its best annual performance since 1979, gold has gained a whopping 15% in the first weeks of this year. President Donald Trump’s new attacks on the Federal Reserve, as well as geopolitical risks in Venezuela, Iran and Greenland, have triggered the so-called ‘currency depreciation hedge’ (debasement trade). In this, investors are withdrawing money from government bonds and currencies and investing it in alternative safe havens like gold. Investors are waiting for Trump’s choice of the next chairman of the Fed. The President has said that he has completed interviews of candidates and has someone in mind for the position. If a more ‘forward-looking’ chairman comes in, it will increase expectations of further interest rate cuts this year, which is positive for non-interest bearing gold.
analysts forecast
Meanwhile, Goldman Sachs Group raised its year-end price forecast for gold to $5,400 an ounce from $4,900, citing rising demand from private investors and central banks. Analysts said risks “are more to the upside as private sector investors may diversify further if global policy uncertainty persists.”
current prices
By 8:00 am in Singapore, gold rose 0.5% to $4,959.39 an ounce. Silver jumped 0.7% to $96.91. Platinum and palladium also rose. The Bloomberg Dollar Spot Index was flat, having ended the previous session down 0.3%.