rose Gold and silver to record levels on Monday, benefiting from weak US labor data and a lower-than-expected inflation reading, which reinforced bets that the Federal Reserve will cut interest rates in January.
Gold rose in spot transactions by about 2% to reach its highest level ever at $4,435.58 per ounce, and US gold futures contracts increased 1.6% to $4,455.7 per ounce.
Silver jumped in spot transactions by about 3.2% to reach a record high level of $69.29 per ounce.
An analyst at Nemo Dot Money said, “Short-term support comes from the escalation of geopolitical tension between the United States and Venezuela… Gold prices have been hovering near record high levels in the past few sessions, so this rise represents a standard advance in light of the geopolitical tension after an upward rally, amid a holiday period in which trading volumes usually decrease.”
Gold prices rise
Gold, a traditional safe-haven asset, has risen by 67% since the beginning of the year, driven by geopolitical and trade tensions, strong buying by central banks, along with hopes of lowering interest rates next year. Silver has also risen by 125% since the beginning of the year.
The data showed consumer prices in the United States rose by 2.7% year-on-year in November, which was lower than the expectations of economists polled by Reuters, which indicated an increase of 3.1%.
Non-yielding assets, such as gold, tend to rise in a low interest rate environment.
As for other precious metals, platinum rose 2.6% to $2,028.34 per ounce, its highest level in more than 17 years, and palladium increased 3.8% to $1,772.74 per ounce, its highest level in about three years.
While markets saw an expected interest rate cut by the Federal Reserve on December 10, and optimism returned to AI stocks in the previous trading session, economic speculation for the coming year has likely pushed global investors into a defensive stance seeking to balance their portfolios.
Given the huge fiscal deficits in the US, UK, Europe, and increasingly in Japan and China, the monetary value of gold has arguably re-emerged, according to Matthew McLennan, head of the global value team at First Eagle Investments.
“The value of gold as a potential monetary hedge has re-emerged,” McLennan told CNBC on December 17. “Gold has gone from being relatively undervalued relative to nominal assets that one might want to use as a potential hedge against, to a more reasonable value. And I think other precious metals groups have followed suit on the rise with some leverage.”
