Gold Price Surpasses $5000 an Ounce with Return of Risk Appetite

SadaNews - Gold prices have risen for the second consecutive day, surpassing the $5000 per ounce level, as investors seek to seize opportunities following a historic collapse that brought prices down from their record levels.

The precious metal surged by 2.6% on Monday, following gains exceeding 6% in the previous session, amid a return of risk appetite in the markets and a decline in the US dollar. Although gold remains about 10% below its record high on January 29, it retains annual gains approaching 17%. Silver prices also increased.

Daniel Ghali, a senior commodities strategist at TD Securities, wrote in a note: "The forced selling pressures on precious metals are likely coming to an end," but added that "the sharp volatility over the past week may cause individual investors to be cautious, even though they have become an increasingly important component in the market."

Precious metals soared last month driven by speculative momentum and geopolitical disruptions, along with concerns about the independence of the Federal Reserve. However, several analysts warned that the rise was swift and exaggerated, leading to a sudden halt in this wave at the end of last week, with silver recording its largest daily losses ever and gold seeing its biggest decline since 2013.

Chinese funds and individual investors in Western markets had built up large positions in precious metals, amid a strong rush towards leveraged trading products and a notable increase in buying call options, which made the market more vulnerable to shocks. The slide continued during Asian trading sessions on Friday and extended into the beginning of this week.

According to Bank of America, volatility will remain a key feature in precious metals markets, while Niklas Westermark, head of commodities trading in Europe, the Middle East, and Africa at the bank, believes that gold has a "more robust and sustainable investment thesis" compared to silver. He added that high gold prices may prompt investors to reduce their positions, but that "will not weaken interest in gold as an investment asset."

Major banks continue to bet on rising gold prices, as Deutsche Bank confirmed on Monday its expectation that gold will reach $6000 per ounce.

By 12:40 PM Singapore time, gold rose 2.5% to $5072.52 per ounce, and silver climbed 3.3% to $87.99. Both platinum and palladium also increased. Meanwhile, the Bloomberg Spot Dollar Index saw little change after ending the previous session down 0.3%.