Gold prices experienced a slight downturn after reaching record highs on Monday. Traders are taking a momentary pause following an impressive rally.
At present, gold is trading at approximately $2,086 per ounce, having surged to an all-time high of $2,152.30 overnight.
The surge in the value of this precious metal is largely due to lower bond yields, resulting in less competition for gold, which does not generate income.
According to Ricardo Evangelista, an analyst at ActivTrades, “As Treasury yields soften, the opportunity cost of holding non-yielding assets like gold decreases. This has led to an increase in demand and subsequently higher prices.”
Recent reports of ship attacks in the Red Sea over the weekend have intensified risk aversion and amplified the demand for safe-haven assets. However, some analysts remain skeptical about the sustainability of gold’s upward trajectory.
Carsten Menke, an analyst at Julius Baer, stated in a research note, “In an economic environment where recessions are unlikely and interest rates remain above average, safe-haven seekers will likely refrain from returning to the gold market in the foreseeable future. We believe that the gold market has advanced too far ahead of itself, and therefore advise against chasing this rally.”
While gold prices may have hit new records, opinions vary on whether this trend can be sustained.
