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Gold Jumps Amid Increased Buying by Central Banks

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  • Gold reaches over $2,350 an ounce, buoyed by central bank acquisitions and its status as a safe haven amid global tensions.
  • The metal’s 15% year-to-date gain surpasses the S&P 500’s 9%, driven by central bank demand and investor uncertainty.

Gold surpassed the $2,350 mark per ounce on Tuesday, continuing its upward trend for the eighth consecutive session, driven by robust trading momentum and demand for safe investments due to heightened geopolitical risks.

Another significant driver is the steady purchasing by central banks.

Following Friday’s jobs report that exceeded expectations, investors are reconsidering the likelihood of the Federal Reserve reducing interest rates this year. JPMorgan Chase CEO Jamie Dimon has cautioned that U.S. interest rates might rise to 8% or higher in the future.

Gold’s price keeps rising, breaking away from its usual close correlation with U.S. Treasury bonds.

This year, the precious metal has exceeded the performance of the S&P 500, recording a 15% increase compared to the 9%[1] rise of the U.S. index.

The primary catalyst behind this surge has been consistent purchases by central banks. Notably, the Central Bank of China has expanded its gold holdings for the 17th consecutive month, boosting its total gold reserves to 72.75 million troy ounces in March. Similarly, other countries have been increasing their gold reserves as well.[2]

During periods of instability, gold often becomes more appealing as investors seek refuge in assets considered safe from economic uncertainties, geopolitical strife, or inflation.

Current escalating tensions, such as Iran’s clear threats of military response against Israel and the ongoing conflict in Ukraine, are contributing to the rise in gold prices.

It’s important for investors to recognize that a reduction in interest rates by the Federal Reserve could lead to a weaker U.S. dollar, making gold more attractive as the demand for this “safe-haven” asset grows.

source: Tradingview

However, if the anticipated interest rate cuts do not occur in the near term, the price of gold might decline.

  

Investors can long Gold using our  3x Gold Miners, 3x Gold.

Alternatively, traders can short Gold using our -3x Gold Miners,  -3x Gold.

 


Footnotes:
  1. Tradingview
  2. World Gold Council
Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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