Gold breaches psychological $2,000 level
Gold has breached the psychological $2,000 level and has an underlying positive momentum. The precious metal was up over 7% in March with its all-time high of 2,074 now in sight. It's appreciated over 25% since its November 2021 low.
There are several elements which are influencing gold.
As suggested in yesterday's article it has an inverse correlation with the dollar. This means that as the greenback declines, gold moves higher i.e., a troy ounce of gold is worth more as the dollar falls.
Another factor at play are lower yields. Typically bonds and gold compete for safe-haven status. However, as yields decline so does the opportunity cost of holding gold over bonds. That is gold becomes more attractive to investors.
The SVB collapse and the ensuing crisis of confidence in the banking sector has seen the 2-year yield decline. Data has also come in weaker and concerns about recession have grown.
Monday saw a weaker than expected ISM Manufacturing PMI, yesterday factory orders missed forecast and the JOLTS series came in lower than 10m for the first time since July 2021.
In effect, the market is anticipating an end to the current hiking cycle and the precious metal is benefitting.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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