The yellow metal set a new all-time high. Gold surpassed its all-time high of €1901/ounce to close March 2024 at €2069/ounce. This represents a gain of +9.42% in March alone. You have to go back to February 2016 to find a monthly gain above this level.
Source : Tradingview
A puzzling increase
Some analysts explain this impressive rally by the anticipation of an interest rate cut scheduled for June. However, Jerome Powell (Chairman of the US Federal Reserve) declared on Wednesday April 3 that they would take their time to see how inflation was behaving and confirm a return to the 2% mark before announcing a rate cut. So, inflation remains a concern and no rate cut has been officially announced.
Central bank purchases clearly supported the price of the yellow metal, but it is difficult to attribute such a rise to them. These same central banks prefer to accumulate gold discreetly so as not to cause the price to explode, and to continue buying at a lower cost. The US dollar index has gained +2.8% since the start of 2024. Not enough to justify such a rally either. There are still fears of a possible worsening of the conflicts currently occupying the international scene.
This is a possibility. Gold is once again playing its role as a safe-haven asset. However, we are probably not yet seeing a gold rush from small investors or individuals. It could be large investors, investment funds, taking positions in the yellow metal. Now, we're waiting for profits to be taken at some point, so that we can begin a healthy correction and come to our senses.
Well, that's the theory. Because, in practice, we're living through a situation that defies logic. Gold has entered uncharted waters!
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Is silver waking up?
The gray metal has gained +16% since the start of 2024. It recorded a gain of +10% over the month of March to close at 23.1€/ounce. At the time of writing, on Friday April 5, silver has hit the resistance zone around 25€/ounce. This resistance corresponds to a high of 25.1€/ounce recorded in August 2020.
Source : Tradingview
On the chart above, we can clearly see the box in which the grey metal has been evolving since August 2020. We'll be watching the price closely to see how silver works this resistance. Should it break this resistance to the upside, it could launch the gray metal towards its former all-time high of 2011 at €34/ounce. The price of gray metal could be fuelled by an imbalance between supply and demand.
Indeed, data from the Silver Institute reveal that demand will outstrip supply in 2021, 2022 and 2023. While gold and silver are both monetary metals, the industrial component of the grey metal is much greater than that of the yellow metal.
And while investment demand has fallen by 7% in 2023 after climbing by 22% (all the same) in 2022, industrial demand is still up by 4% in 2023 after a 5% rise in 2022, thanks in particular to the photovoltaic energy sector. Compared to gold, silver metal remains undervalued at present.
Today, it takes 85 ounces of silver to obtain one ounce of gold, compared with 35 ounces at the gray metal's historic peak in April 2011.
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