Gold Prices May Soon Reach An All-Time High And Remain There

Given the difficulties faced by international banks and the U.S. Another bank rate decision by the Federal Reserve may break all-time highs and remain there.

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According to Tina Teng of financial services firm CMC Markets, "A sooner Fed turnaround on rate rises will likely produce another gold price rise due to a potential additional decrease in the U.S. currency and bond rates." She predicts the price of gold will range between $2,500 and $2,600 per ounce.

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Due to the implosion of Credit Suisse and the closure of Silicon Valley Bank, investors have been moving their money into gold and Treasurys.

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The price of gold is $1,940.68 per ounce. It crossed the $2,000 mark on Monday, reaching its highest level since March 2022. Since early March, when SVB had a bank run, gold has gained by about 10%.

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In August 2020, gold reached its all-time high of $2,075 according to data from Trade Algo. It is expected that demand from federal reserve will maintain wind in its sails.

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According to Wheaton Precious Metals CEO Randy Smallwood, continued central bank purchases of gold are positive for long-term pricing.

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Smallwood predicts that gold will reach $2,500.

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According to the World Gold Council, "colossal central bank purchases" are what caused gold demand to soar to an 11-year high in 2022. In 2017, central banks purchased 1,136 tons of gold, a 55-year high.

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Fitch: Gold costs will continue to rise.

The business predicated its view on "global financial instability," adding that it expected gold to "stay elevated in the years ahead compared to pre-Covid levels," and predicted that gold would hit a high of $2,075 "in the coming weeks."

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Senior market analyst Craig Erlam at the foreign exchange dealer Oanda concurs with Fitch's upbeat forecast.

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"I believe it is extremely likely that gold will exhibit excellent performance in the upcoming months. The stars seem to be in gold's favor, and it may soon set new records, according to him.

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According to Erlam, "Interest rates are at or near their high, cutbacks are now being priced in more quickly than expected on the strength of recent problems in the financial sector." He said that he believes that dynamic will increase gold demand, even if it corresponds with a weaker dollar.

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The next steps for the Fed

Investors are eagerly observing the Federal Reserve's upcoming actions and how they may affect the price of gold.

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Despite varying forecasts from analysts, the Fed started its two-day meeting on Tuesday and is widely anticipated to approve a 25 percentage point rate hike on Wednesday.

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According to Nicky Shiels, head of commodities strategy at gold bullion company MKS Pamp, "overall, the Fed will have to pick between more inflation or a downturn, and either option is favorable for gold." She expects the price of gold to rise to $2,200 per ounce.

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According to James Steel, chief gold bullion analyst at HSBC, a decline in the value of the dollar could help gold prices. Steel anticipates a 25 basis point increase from the Fed.

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Gold And The Dollar

"Gold and the dollar experienced simultaneous events earlier [last] week, as was observed. And that's extremely exceptional," Steel added in reference to the dollar's and gold prices' recent increases.

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Typically, the value of the American dollar and gold prices are inversely correlated. Nonetheless, the apparent safety of the US is generally favored by investors. Treasurys and gold at the same time when the economy is struggling.

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This scenario doesn't occur frequently, but when it does, Steel added, "it is always a symptom of rising investor anxiety."