International Gold Price Rises as USD Weakens
New York, March 8, 2023 – The international price of gold surged today, boosted by a weakening US dollar. The precious metal reached a peak of $1,960 per ounce, its highest level since April 2022.
The rally in gold prices came as the US dollar index (DXY), which measures the strength of the greenback against a basket of six major currencies, declined by 0.5%. A weaker dollar makes gold more appealing to international buyers, who pay for the metal in their respective currencies.
Analysts attributed the dollar’s weakness to concerns over the Federal Reserve’s aggressive interest rate hiking cycle. The Fed has raised rates by a cumulative 450 basis points since March 2022 in an attempt to combat soaring inflation. However, some market participants believe that the central bank may be nearing the end of its tightening path, which would reduce upward pressure on the dollar.
Gold prices have also been supported by safe-haven demand amid ongoing geopolitical uncertainties. The ongoing war in Ukraine and heightened tensions between the US and China have prompted investors to seek refuge in traditional safe assets.
“Gold is benefiting from its status as a haven asset during a period of market volatility,” said Ronald Stoeferle, senior analyst at Incrementum AG. “Investors are looking for ways to protect their portfolios from geopolitical risks and potential economic headwinds.”
Looking ahead, analysts believe that the outlook for gold remains positive. The Fed is expected to make two more rate hikes before pausing its tightening cycle, which could further weaken the dollar. Additionally, geopolitical tensions are likely to persist, providing continued support for safe-haven assets like gold.
“We believe that gold is well-positioned to continue its upward trend,” said Michael Widmer, chief investment officer at Zürcher Kantonalbank. “Its safe-haven appeal and the prospect of a weaker dollar should support prices going forward.”
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