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Gold Price Hits Another Record High-And the Buying Appetite May Not Cool Soon

Gold prices printed another record high on Tuesday, as it reached $2365 per ounce in the spot market, after gaining 1.10%.  The precious metal followed a similar trajectory at the futures market, with COMEX reporting a new ATH of $2,382 per ounce. The commodity has experienced a stellar performance in 2024 and has gained 15.30% since the year began.  Furthermore, it has risen by 5.75% in the first nine days of April.

Safe haven buying has kept gold on the ascending lane, with central banks still piling up the commodity despite a relatively stable global economy.  China has been at the forefront of increased gold buying by central banks, with its central bank adding to its bullion vault for the 17th successive month in March. The gold-buying spree saw it purchase 225 tonnes in 2023, according to World Gold Council. It will likely break that record if the trend continues.

Notably, China is stashing up gold when the yields on US Treasury bonds are substantially high, signaling a potential shift in its reserve policy.  Some analysts believe that China is keen on diversifying its reserves as a means of detaching itself from the dollar, which could potentially make it vulnerable to the US in case of confrontation between the two nations. Notably, China has raised the proportion of gold in its foreign reserves from 2.9% in 2019 to 4.3% as of this writing.

With geopolitical temperatures still high in the Middle East and the Russia-Ukraine war showing little sign of ending, safe haven buying is likely to keep gold prices on the rise. However, retail buying has also risen significantly in China in recent months, as investors seek alternatives from troubled stock and property markets. Meanwhile, the XAUUSD trading pair will get fresh impetus when the US releases its CPI figures on Wednesday. Recent upbeat US economic figures have raised the prospects of higher-for-longer interest rates, and the inflation figures will play a crucial role in shaping that perception.

Technical analysis

Gold price pivots at 2354, and the buyers are currently in a strong position to maintain the upside push. If they keep the price above 2354, the next resistance will be at 2370. Furthermore, a breach of this mark will increase the likelihood of further advances to test 2380.  On the other hand, a slip below 2354 will favour control by the sellers, with support coming at 2345.  Extended control by the sellers at this level could propel further decline to 2330.