Supported by a weaker dollar and speculation of an end to aggressive monetary policy tightening in the US, gold has reached a 13-month peak. It shows potential for further upward movement toward new record levels.
The price of the precious yellow metal is $2,023 per ounce at the time of writing this report. On Tuesday, the gold crossed $2,000 for the first time since March 2022 after data showed that the number of vacancies at US employers fell in February to the lowest level since May 2021.
According to Bloomberg, the data sparked concerns about a potential recession in the world’s largest economy. They raised the likelihood of the Federal Reserve continuing to reduce its interest rate hike cycle.
The dollar’s decline this week was another positive for non-interest-bearing gold bullion, which could test the earlier high of $2,075.47 reached in August 2020.
Analysts say that concerns about the US dollar are now primarily driving the price of gold, and current economic factors indicate little favor towards the US currency. Gold bullion also enjoys “safe haven premium” status due to current financial fears, including the recent banking crisis and geopolitical tensions.
Tuesday’s job creation and labor turnover data came ahead of Friday’s monthly jobs report, which analysts will closely watch to determine whether the US economy is slowing.
In Which Currencies Are the Most Profitable Gold Trade?
For centuries, investors and governments have used gold as a safe commodity to protect their assets. In addition, it represents a refuge for investors in times of crisis, when traditionally, it does not lose value but, on the contrary, gains it additionally. It is interesting to compare how much return this precious metal brought to investors in different major world currencies during the last year.
In the world’s largest economy, the United States of America, in 2022, gold recorded a small gain against the dollar, in contrast to the growth concerning some other national currencies.
There is a direct correlation between the price of gold and the US dollar because gold is mostly traded globally as the world’s dominant currency.
