Gold shines again!

The gold price was driven by hopes of an imminent end to the US interest rate hike cycle. The US Federal Reserve may feel compelled not to raise interest rates any further, at least because the economy and financial market are being buffeted by recessionary concerns. In particular, concerns over the banking sector became evident in March: the bankruptcy of the Californian Silicon Valley Bank and the "Made in Switzerland" bank run brought back memories of the financial crisis. Gold was once again able to play its role as a safe haven in this situation.

In the past, this threshold of USD 2,000 has been a "tough nut to crack". The gold price has not yet been able to establish itself over the USD 2,000 mark for the long term. To the contrary, following the highs at 2,000, there have always been considerable setbacks with value losses of up to 20 percent.

Positive and negative arguments are currently evenly balanced

The following facts point to a further increase in the gold price:

• Concerns about a recession will persist for the time being.
• ETF gold holdings and flows are positive.
• Geopolitical policies – in particular the uncertainties surrounding the Russia-Ukraine war – continue to speak in favour of gold.

The following facts argue against an increase in the price of gold:

• Investors are taking profits above the 2,000 mark.
• Real yields have been rising since 2022.
• Gold, an interest-free investment, would be expected to lose value.

Gold and real yields

In addition, the 2,000 mark has a psychological component.

• Investors currently still see USD 2,000 as the maximum price for gold.
• As soon as the gold price can stay at or above this level for a longer period of time, investors will get used to it and will also be able to imagine higher prices.

We believe that gold will still need two to three attempts before the price can sustainably establish itself above the USD 2,000 mark per ounce.