On Wednesday, gold prices climbed slightly towards a 2020 record high while economic slowdowns led to higher demand.
The gold futures for June delivery increased by 0.13% to $2,040.75 per ounce on April 05’s Asian afternoon session. However, its spot price traded lower than $50.00 from a high record of $2,072.90 an ounce from the pandemic.
Federal Reserve Bank of Cleveland President Loretta Mester said that US interest rates would continue to jump. Despite the economic weakness, rates will stay above 5.00% for a while. The markets ignored these comments.
On the other hand, weak manufacturing activity data and hints of a cooldown in the US jobs market raise doubts. As a result, investors are still determining how much headroom in the economy the Fed has to keep boosting rates.
Also, negative economic indicators made fears of a looming recession grow, leading haven flows into gold.
Since early May, the yellow metal has been disruptive since banking collapse fears prompted haven plays into bullion. Furthermore, the commodity gained support from more bets that the Fed would have little room for rate hikes.
Moreover, Mester’s comments gave weak support to the dollar. It traded to an almost two-month low against a basket of currencies. The dollar’s weakness supports most metals.
Mining of Gold Expected to Ease
The Department of Industry, Science, Energy, and Resources of the Australian Government (DISER) mentioned an increase in gold supply. This growth equated to a 1.50% year-on-year to 4,755.00 tons in 2022. It was led by a 1.20% rise in global mining production.
However, DISER reported that Chinese environmental regulations would lessen outputs over the medium term. It would balance increases in mining production. As a result, the industry added that manufacturing would be prominent in Canada.
According to analysts, global gold mining is bound to go up by 1.80% per year by 2024 to 3,750.00 tons. It is brought about by increases in Canada, Australia, and South America.
From 2025, supply is forecasted to be steady at under 4,800.00 tons. Also, higher gold prices are expected to lead to higher recycling activity, neutralizing the plunge in mining.
