Gold continued its gains this Wednesday (3), surpassing US$ 2,300 per troy ounce, with the metal benefiting from the asset reading as a store of value for inflation scenarios. Physical purchases help boost prices. In addition to its inclusion in central bank portfolios, especially in China, the metal also arouses the interest of Chinese investors given the lack of other attractive alternatives, according to Bank of America Securities. The advance in gold occurred today amid a decline in short-term Treasuries (fixed income securities issued by the US government) and the dollar, following speeches by the president of the Federal Reserve (Fed, the central bank of the USA), Jerome Powell.
On Comex, the metals division of the New York Mercantile Exchange (Nymex), gold scheduled for delivery in June closed up 1.45%, at US$2,315.00 per troy ounce, a new historical record. The metal extends gains for the third consecutive session in April, after ending March with an accumulated gain of 8.94%.
The Fed president said that interest rates have already reached their peak and that most members of the American Central Bank believe it is appropriate to reduce them at some point this year. He reiterated the Fed’s next steps depend on economic indicators. Recent data continues to indicate the strength of the economy.
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Bank of America Securities noted in a report that central banks themselves continue to add gold to their portfolios, such as the People’s Bank of China (PBoC). “This purchase also attracted retail market participants in China. In fact, jewelry sales and non-cash gold imports reached record levels earlier this year,” according to BofA Securities. To a certain extent, this interest reflects the lack of alternative options for Chinese investors, as the stock and real estate markets are not yet particularly attractive.
The BofA brokerage cites that investors have focused on low-delta call options – options that tend to have more contained appreciation or depreciation given the variation in the underlying asset. “Traders want exposure to the rally, but in the form of optionality and not linear investment. In our opinion, this is strongly influenced by the continued apprehension regarding the direction of monetary policy”, says the broker, who maintained the US$2,400 projection for gold.
With information from Dow Jones Newswires
Tags: Gold closes higher renews record face greater demand security
