Setting fresh highs: No end seen for gold rally

A number of analysts on the Wall Street foresee the historic rally in gold prices to break more records—having already scaled to $2,420/ounce last Friday following reports of an imminent Iranian attack on Israel with one of them pegging the rally touching the $2,700-mark by December as investors continue to rush to the best safe-haven asset as seek refuge.

- BENN KOCHUVEEDAN

They see the only respite if at all, will come if the greenback gains, as gold prices are inversely linked to the strength of the US currency along with major central banks pushing back from snapping up more gold as reserves. Another reason for the safe-haven rally is the slew of elections this year, including India, the US and England.

After losing ground following the stock market rally after the pandemic deep-cuts, gold lost ground in 2021 and 2022 but the Russian invasion of Ukraine in late February 2022 changed the course of the yellow metal and since then it has not looked back. After dipping to a low of $1,984/oz in mid-February, gold has steadily climbed almost without interruption and has since then gained almost 20%.

The immediate trigger for the past $2,420/ounce rally has been the hotter US inflation and other dataprints, reinforcing expectations of shallower rate cuts by the US Federal Reserve this year which will begin well after June.