Crisis currency

No end in sight to the gold price rally

(Bild: APA/dpa/Sven Hoppe)

The more uncertain the times, the higher the price of gold - so it is no wonder that the price of the crisis currency has already risen by a fifth against the euro this year. An end to the gold rally is not in sight for the time being, and analysts believe that the 3000 dollar per ounce mark could be broken in the medium term.

Most recently, tensions in the Middle East and the Iranian attack on Israel have pushed the price of gold to new heights. The expected interest rate cuts by the US Federal Reserve and the European Central Bank also make gold appear more attractive. Falling interest rates are making gold increasingly attractive in comparison with fixed-interest investments such as bonds.

Not only gold on the rise
However, not only the price of gold has risen, but also the prices of oil and copper, and the stock markets have also risen, said Ronald Stöferle, a gold expert known for his precious metal and commodity analyses. There is currently a flight into tangible assets. "A lot of capital is flowing out of by far the largest and most important asset class, namely the bond market, due to the stubbornly high inflation rates."

"Silver has also performed quite well with the tailwind from gold, but we are still well below the all-time highs, adjusted for inflation anyway," says Stöferle, who still sees a good entry opportunity for investors. "Mining shares have also slowly picked up again."

Central banks support gold price
The gold price is also being supported by the high demand from central banks. "They have pulled a bit of a floor under the gold price and are of course not incredibly price-sensitive." Central bank demand for gold reached an all-time high in 2022 and was only slightly lower in 2023. "Even in 2024, it looks like they will buy over 1,000 tons again. These are primarily central banks from the emerging markets, first and foremost China of course."

The Chinese stock market has not really done well, interest rates on savings accounts have fallen - so the gold market is an obvious choice. Purchases have reached unbelievable dimensions, and this can continue, as Chinese savings volumes are enormous.

Goldexperte Ronald Stöferle

The crumbling real estate market there is also causing investors to look for alternatives. "The Chinese stock market has not really done well, interest rates on savings accounts have fallen - so the gold market is an obvious choice. Purchases have reached unbelievable dimensions, and this can continue, because Chinese savings volumes are enormous."

India has also shown little price sensitivity so far - however, elections are now being held there, and historically, demand for gold has always fallen during the multi-week whales. "China and India are responsible for more than half of physical demand, the emerging markets in general for more than 75 percent," explained Stöferle. "The price of gold is certainly no longer made in the western world, but in the emerging markets."

The gold price could receive a further boost if Western financial investors also jump on the bandwagon, Stöferle believes. "Investor demand, as you can see from the ETFs (exchange-traded funds, note), is still relatively low."

Smaller downward corrections conceivable
There could be minor downward corrections in the short term. "In general, I could well imagine that there will be a bit of a breather over the next few weeks. We must not forget that the gold price has already risen extremely sharply since the beginning of the year. In euro terms, it has risen by 20 percent, in dollar terms by 15 percent, in Japanese yen terms by 26 percent and in the actually hard currency, the Swiss franc, by 25 percent."

However, Stöferle, whose Liechtenstein-based investment and asset management company Incrementum AG will publish its next "In Gold We Trust" report on May 17, believes that the bull market is fundamentally intact.