Gold prices surged on Friday, reaching unprecedented heights fueled by central bank acquisitions amidst global geopolitical tensions, thus extending the precious metal’s winning streak. Despite robust U.S. economic indicators, including strong inflation figures and a favorable jobs report, the allure of gold remained intact.
As of 0740 GMT, spot gold surged by 0.9% to $2,395.56 per ounce, reaching a pinnacle of $2,398.49 earlier in the trading session. Meanwhile, U.S. gold futures experienced a significant uptick of 1.7%, reaching $2,413.00.
Analyst Luca Santos from ACY Securities highlighted the role of geopolitical turmoil in driving central bank purchases of gold, underscoring gold’s historical status as a safe-haven asset. Santos noted, “One thing that is definitely fulfilling this gold buy from central banks are the wars happening around the globe, if we look through the history this always happened as gold is a safe haven.”
Despite recent data indicating rising inflation and a robust U.S. job market, concerns over potential interest rate hikes have not deterred gold investors. Gold is set to record its fourth consecutive weekly gain, having appreciated by over 15% since the beginning of the year.
Vincent Tie, sales manager at Silver Bullion, emphasized the technical aspect of gold’s rally, attributing it to a breakthrough following a 42-month consolidation period. Tie likened the situation to “a coiled spring being let loose now,” indicating expectations for further price increases in the coming months.
However, the appeal of gold could potentially diminish with higher interest rates, which tend to reduce the attractiveness of non-yielding assets like gold. The European Central Bank maintained its record-high interest rates but hinted at possible cuts starting as early as June.
In parallel, spot silver also witnessed a notable surge, rising by 2% to $29.04 per ounce, marking its highest level since February 2021. Tie noted that historically, silver tends to outperform gold once it breaks out, suggesting a growing interest among investors in silver assets.
“As with past precious metal price rallies, silver will outperform gold once it breaks out. We are already seeing customers privy to this behavior positing themselves in silver in past months,” Tie remarked, highlighting a potential shift in investor sentiment towards silver.