Over the past few weeks, gold has regularly crossed its record levels. The value of a one-kilo ingot is now flirting with the 70,000 euro mark. Gold prices thus benefit from the quality of safe haven attributed to gold in the current period full of uncertainties, both at the economic and geopolitical level. They are also supported by the behavior of Central Banks. Decryptions.

Evolution of the price of gold

Friday April 5, the value of an ounce of gold reached 2,110.87 euros, a record level. The price of a one-kilo ingot is therefore flirting with the 70,000 euro mark. The gold market is therefore continuing its good momentum started since the end of 2023. Since January 1, 2024, the price of gold has increased by almost 12%. The percentage increase even reaches 22.2% if we compare the current price to that of October 6, 2023.

One ounce of fine gold is equivalent to approximately 31.1 grams.

Price of an ounce of gold

Silver is also breaking records, following the demand for precious metals. Gold is not the only precious metal to see its prices soar in recent weeks. This is also the case with silver, including siver futures and call options. An ounce of silver is currently trading at more than 25.43 euros, or 3.95 euros more than at the beginning of January. This represents an increase of almost 18% in just over 3 months. At this rate, silver could quickly return to the heights reached in August 2020: an ounce of silver was then trading at more than 28 euros.

How can we explain the heights reached by the price of gold

Several elements allow us to account for the strong increase in gold prices due to gold investing. First of all, gold is still considered a safe haven: it remains a sought-after value in times of crisis and/or uncertainty. Currently, demand for the yellow metal is driven by the uncertain outlook for the strength of the global economy and geopolitical tensions. The latter are indeed numerous: war in Ukraine, Israel-Hamas war, crisis between Taiwan and China, American presidential election next November, etc.

Then, the anticipation of an upcoming easing of monetary policies carried out by the most important central banks, including the Federal Reserve (FED) for the United States and the European Central Bank (ECB) for the euro zone, stimulates the prices of gold.

The latter have in fact announced that they will lower their key interest rates during the year 2024, which will result in a reduction in nominal interest rates. Under these conditions, one of gold’s major disadvantages compared to other assets – it generates no regular income, unlike most stocks and bonds – is expected to diminish, making the metal yellow even more attractive.

Finally, gold prices are supported by purchases made by individuals, businesses and central banks around the world. This is particularly true for the central banks of emerging countries which wish to diversify their reserves. Thus, according to data from the World Gold Council, the Central Banks of China and Poland acquired 224.8 and 130 tons of gold respectively during the year 2023 alone.