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Tuesday, June 6, 2023

Gold Prices At Record, Crosses 60000 Level For First Time

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The Daily Mint
The Daily Mint
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The price of gold crossed a lifetime high on Wednesday as traders and analysts believed that the soaring prices of the commodity were due to the American banking crisis, which led people to look for a haven to park their funds.

In times of economic turmoil, it is common to see gold hit all-time highs as investors look for an asset that will preserve their wealth. While it is hard to pinpoint the cause of gold’s rise in price, several factors have contributed.

Banks – Central banks have continued to add to their gold reserves, which have become an essential part of their reserve portfolios. Many countries are also beefing up their bullion holdings.

Recession fears – The economy is slowing down worldwide, and governments are increasing interest rates to protect their economies from falling inflation. As a result, demand for gold may continue to be driven by this trend.

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Volatility – Investors have been worried about the stock market movements recently. They have hesitated to invest in stocks and gold, considered a trusted preserver of wealth.

New Positions – This is another major factor that has helped the yellow metal reach its new heights. The commodity is always traded worldwide, with trading in major markets like New York, London, Tokyo, and Hong Kong.

Central Banks – The number of central banks buying the yellow metal is increasing.

Almost 20 percent of central banks plan to increase their gold reserves in the next 12 months.

China – The demand for gold is fuelled by increased jewelry purchases in India and China, particularly as the Chinese government has opened up the economy to foreign investment.

Ukraine war – The conflict in Ukraine has kept Europe on edge, and investors are still determining the future of their investments.

Central Banks – It is a common perception that gold prices depend on central bank purchases.

The Federal Reserve has aggressively raised rates over the past two years to combat inflation. However, a recent downgrade in the US dollar is causing some to question the Fed’s path forward.

While the metal is still rising, its trajectory remains weaker than expected. The Fed could cut its rate hikes shortly, but market expectations of this have not yet been reflected in the gold price.

As long as the dollar depreciates, gold will likely continue to rise in the long term. But if the Federal Reserve starts to tighten its policy, gold will have a more challenging time maintaining its record highs.

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