09.03.2023 – Most of the time, the reasons for a price movement only become clear afterwards. Especially in relatively small markets like gold. A fact has just become known that has largely been lost in the mainstream media: Singapore was busy buying gold in January. This special factor supporting the price has now fizzled out for the time being. In addition, higher interest rates are slowing down the gold price.
Let’s first look at the daily chart. The analysts of “FXStreet” commented, bearish traders must wait for a sustained break of the round mark of 1,800 dollars. We add: Below that, the 100-day moving average is support – that’s the line below. According to “FXStreet”, a short-covering rally can take gold to the one-month high at 1,858. However, the 50-day moving average at 1,869 could stop the upward movement.
Source: Bernstein Bank GmbH
And so back to the fundamental facts. The gold blog “BullionStar” has been paying attention: The Monetary Authority of Singapore (MAS) has returned to the market as a buyer – purchasing 44.6 tons of gold in January alone. Holdings rose from 153.8 to 198.4 tons. A nice plus of about one third. The purchase was the second largest monthly deal ever, only in 1968 Singapore had bought more yellow metal from South Africa with 100 tons. The purchase took place quietly, only on the website of the MAS the figures were updated, according to “BullionStar”.
Monetary guardians rely on gold
This fact is interesting because it means that another central bank is betting on precious metal. As we have already reported here, China, Russia and Turkey also bought diligently in the past year. This is another indication that the world’s central banks either believe in sustained inflation and want to hedge against the decline in the value of paper money with precious metals. Or the monetary guardians expect a deflationary crash, in which case gold would also be a safe haven. In any case, the buying shows us that gold is a long-term bet for central banks.
Higher interest rates put the brakes on
Of course, there is also another bearish factor that is slowing gold down: interest rates are rising everywhere. The Federal Reserve, in particular, is rushing ahead. Precious metal doesn’t yield interest, and it costs too – fees to store it at the bank or to install a safe at home. We are curious to see which factor will prevail in the market. Whether long or short – Bernstein Bank wishes successful trades and investments!
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