Gold price scales a new record yet again, at $2,345 an ounce

Gold has scaled a record high yet again, with the price of an ounce of the precious metal rising to more than $2,345. So far, the rise in price highlights a record settlement, for the 13th time this year.

June gold settled at $2,345 (Rs 1,95,252.09 at the time of publishing) an ounce on Comex, according to MarketWatch. This is a rise of $36.90 (Rs 3,073.08), or 1.6 per cent, in the session, and a record settlement for most-active gold contract based on data going back to 1972 according to Dow Jones Market Data. Prices have gained 13.2 per cent this year so far.

The current upswing follows last week’s rise in gold prices. On Thursday, the price of the metal rose to $2,301.21 an ounce following Federal Reserve Chair Jerome Powell’s assertion that bringing down interest rates “at some point this year” was a likely course of action. The jump in bullion reflected a 0.9 per cent increase, though it seemed unlikely to affect gold import into India.

Besides Powell’s assertion of a potential fall in interest rates, the ongoing upturn in gold prices is being attributed to several other reasons, too, notably global political tensions, industry apprehensions over inflation, and an overall economic uncertainty all over the world. Gold, in this context, is regarded as a safe haven asset and its price has usually shown a tendency to shoot up amidst political and economic turmoil.

Powell’s speech last week seemed significant for gold investors because he indicated policymakers would wait for lower inflation rates before slashing interest rates. Lower rates are seen as a positive sign for gold buying because it means no interest is paid. In 2024, gold has already escalated over 10 per cent, setting new records.

India has traditionally been a big market for gold, marked by the demand for soft jewellery and irrespective of price rise. According to the World Gold Council website, gold imports into India increased phenomenally in February — at 134 per cent annually and 222 per cent on a sequential basis. The total gold import in February stood at US$6.1 billion. This followed a three-month slump and marked the highest figures since last October. Gold import in February was around over 90t in volume, and the upward swing can perhaps be accounted to the wedding season, besides dealers and manufacturers stocking up ahead of the Lok Sabha polls. In terms of forex reserves, gold accounted for 7.7 per cent by February-end.

Investors usually regard gold as an unconventional investment because it reacts differently to market logistics compared to other assets. Those in favour mention how gold manages to increase or retain its value amidst inflation, or at times when currency faces the threat of being devalued. These are reasons investors have normally shown a tendency to invest in gold rather than stocks and shares when the market is bear-ish or at during the time of recession.