Gold has never been so expensive. Its prices over the past long weekend reached a historical record, specifically on Friday, exceeding the round barrier of 2500 USD per ounce. In Poland, prices for 1-ounce coins, which weigh 31.1 grams, were once again close to PLN 10,000. Interestingly, mainstream financial media such as CNBC, The Wall Street Journal or Bloomberg, were mostly silent about this record. Is gold still a popular form of investment?
Silent record. Why is this happening?
Last Friday, gold reached a record, surpassing another psychological barrier – this time 2500 USD, while prices expressed in PLN reached almost PLN 10,000. Currently (as of 19.08), these levels remain high – gold costs over $2500 and more than PLN 9600.
Why was the new record so quiet? I assure you that the reason was not the long weekend that was then taking place in Poland – says Tomasz Gessner, chief analyst of Tavex company. Gold is a topic very sensitive to the current monetary system and its records also reveal the falling purchasing power of the dollar. Furthermore, gold is a competitor to other asset classes such as stocks, bonds or investment funds. As long as there is relatively little media coverage around the strong increases in gold prices, the trend still has a good basis for continuation, and when media excitement appears at some point, it usually serves as a warning of an upcoming correction – he adds.
The price of gold is still favored by expectations for the beginning of an interest rate cut cycle in the United States. The first cut is currently priced by the market at the Federal Reserve meeting scheduled for September 18. Depending on the macroeconomic data published to this date, with a focus on inflation and the labor market, the scales will tilt towards cutting rates by 25 bp or 50 bp at once.
In the coming week, from Thursday to Saturday, investors will be looking at the annual symposium of central bankers in Jackson Hole in the USA, where the head of the Federal Reserve Jerome Powell is also likely to speak. If he sheds a bit more light on what we can expect at the September meeting, markets will probably react instantly, including the record-breaking gold.
Are we still investing in gold?
Despite recent volatility, the gold market remains one of the most stable choices for investors looking for a safe haven.
Central banks are also increasingly appreciating the precious metal, which, according to the latest report of the World Gold Council, is relied on by the banks, among others, because of: long-term value retention, resistance to inflation and crises, and no third party risk. Importantly, the record demand from central banks in the first half of the year was the highest this century!
On our domestic market, the situation is not different from the world standard. The National Bank of Poland currently has 377 tons of gold, which constitutes 13% of the total reserve assets, while there is still a declaration in force to direct this share towards 20%.
Source: https://managerplus.pl/po-ciuchu-padl-historyczny-rekord-ceny-zlota-90361
