Gold Prices Surge to Record Highs as Physical Demand Tumbles - Expert Analysis
By Anjana Anil and Polina Devitt
Gold prices have skyrocketed to a record $2,685.42 per ounce, marking a 29% increase this year. This surge has been driven by U.S. Federal Reserve interest rate cuts and geopolitical tensions, causing a significant impact on physical demand for gold in key markets.
Industry players and analysts report a sharp decline in physical demand, with some retail consumers choosing to sell their holdings to cash in on profits. The situation is particularly dire in India and Europe, where high prices have deterred buyers and prompted investors to turn to yield-bearing assets.
Despite hopes for increased activity in physically backed gold exchange-traded funds, inflows remain modest. In China, both physical and paper gold demand are weakening, while online marketplaces in the Western world are experiencing mixed activity post-Fed rate cuts.
Experts suggest that the surge in gold prices is defying traditional logic, as high prices are not curbing demand as expected. The situation poses a challenge for investors and consumers alike, with visible demand collapsing across various segments.
Overall, the surge in gold prices and decline in physical demand signify a complex market scenario that investors need to navigate carefully to protect their finances and make informed decisions.