Even experts are puzzled about the high price of gold. Some expect the increase to continue, others are skeptical. The air is getting thinner and thinner.
The price of gold has increased 17 percent since the beginning of March and is now around $2,400 per troy ounce (31.1 grams). This is a record level. And: There hasn't been such a strong upward trend in precious metals for a long time. But why is the precious metal currently on the rise? And how does it continue? The most important questions and answers.
What usually favors the price of gold?
Negative interest rates, a weak dollar, a financial crisis, geopolitical uncertainty: these factors are in most cases the biggest drivers of the gold price. Some of them can currently be found. The escalating conflict in the Middle East is fueling fears of a conflagration in the region. The fear currency gold is benefiting from this - as well as from the war in Ukraine. The problems on the real estate market in China also support the crisis currency, which often rises when there is a crunch in the financial system. On the other hand: There is no real financial crisis right now. And: Gold is always interesting when interest rates are low or the stock markets are doing poorly. Neither is currently the case, on the contrary. This is actually a negative factor for gold. After all, the precious metal pays neither interest nor dividends. The dollar is also strong, which otherwise often weighs on the price of gold. In theory, there is a lot that speaks against gold. Nevertheless, the precious metal has recently rushed from record to record. There have only been very small interim setbacks so far.
Why is the price currently rising?
Many observers attribute the recent increase to the fact that central banks are stocking up on gold. According to the World Gold Council, all central banks in the world recently had around 36,000 tons in their vaults - more than ever before. China in particular is currently increasing its stocks. The second main reason for the price increase is speculators on the financial markets. They are betting that the US Federal Reserve and the European Central Bank will soon noticeably lower interest rates. This would be an advantage for gold: Compared to stocks or bonds, the interest-free product would no longer be in such a bad position mathematically. Recently, speculative bets on the price of gold using derivatives and futures contracts continued to rise and drove up the price of gold.
What are the latest price predictions?
Many banks and analysts have recently increased their price forecasts for the precious metal. The US investment bank Goldman Sachs sees the price of gold at the end of the year at 2,700 US dollars per troy ounce, around 20 percent higher than currently, and Bank of America can even imagine 3,000 dollars in the coming year. The fact that gold is holding its own so brilliantly despite all the stress factors bodes well for the future, says prominent US analyst David Rosenberg. He also assumes that the price will rise to more than $3,000 and points to interest rates falling soon and the simmering wars in the Middle East and Ukraine.
Are there also skeptical experts?
Yes, for example the German Commerzbank. She spoke of a “mysterious gold strength” back in March. The sharp increase cannot really be explained by the purchases made by the central banks or by the interest rate forecasts. Speculators often know that there is a lot going against gold, but they simply continue to bet on an increase because others are doing the same, according to Carsten Fritsch and Thu Lan Nguyen, both commodity analysts at the bank. The gold profits appropriate for interest rate cuts have “already been largely anticipated” and have already been very high. Because of stubborn inflation in the USA, the prospects for significant interest rate cuts have simultaneously become worse, even though the price of gold has increased - a dangerous combination. It is by no means certain that great interest rate hopes will be fulfilled. Commerzbank therefore expects the price of gold to fall to $2,100 by the end of the year. Adrian Ash from Bullion Vault also believes that gold is a “hot trend” at the moment. But: “No financial market moves in a straight line forever.” Translated, this means: things will go down again - and that could happen soon.
What is the best way to buy gold?
So it's better to stay away from gold? Everyone has to decide that for themselves. In the long term, however, the precious metal offered a certain degree of diversification, especially in bad times on the financial market, say experts. They therefore generally consider a small addition of five to a maximum of ten percent to be sensible. By the way, the gold does not necessarily have to be placed in the safe in the form of bars or coins. There are also financial products backed with physical precious metals, such as Xetra-Gold or Euwax-Gold II. After a holding period of one year, just like gold bars and gold coins, they are also exempt from withholding tax.