For all GoldRepublic account holders who have faithfully invested in gold over the past years: your patience has been rewarded. The gold price has reached new highs both in euros (€63,368 per kg) and in dollars ($2,160 per troy ounce). Just a week ago, on February 29, I reported in the newsletter a gold price of €60,431, which means the price has increased by more than 5% in a single week! But what's driving this increase? Here are some explanations.

People’s Bank of China
China's central bank has expanded its gold reserves for the 16th consecutive month, contributing to the record high gold price. With an addition of about 390,000 troy ounces in January, the bank now holds a total of approximately 2,257 tons of gold. These ongoing purchases by central banks, with China in the lead, play a key role in gold's strength. At the same time, demand within China remains strong, despite high prices, due to concerns over the uncertain economic recovery and the faltering real estate market, leading investors to turn to gold as a safe haven.

NYCB
New York Community Bancorp (NYCB) has announced raising $1 billion in capital and has made changes in leadership. The bank was facing declining stock prices and challenges such as an increased provision for potential loan losses and a downgrade in credit rating. These developments follow earlier concerns about regional banks in a context of higher interest rates and economic pressure, which I wrote about in the newsletter of February 8. Shares of NYCB are down 65% since the beginning of the year. Will bank customers lose confidence in the bank? Then a possible bank run could cause a domino effect among other regional banks.

Buy Gold

Several factors contribute to the increase in the gold price. For instance, there is anticipation of a rate cut by the Fed in June, which could weaken the dollar and thereby make gold more attractive as an investment. Furthermore, the interest rate on 10-year U.S. Treasury bonds has experienced a 5% decline since last week, decreasing the attractiveness of these bonds in favor of gold. Additionally, unwinding short positions in the market can also give an impulse to the gold price.

The Broad Public is Yet to Come
The chart below illustrates the relative search frequency for 'goldprice' on Google. Previous peaks in the goldprice were accompanied by an increase in search queries, a trend that currently seems absent. This indicates that the recent rises in the gold price are happening quietly, without much public attention. The question arises when the general public will notice and discuss this development. When will your hairdresser or taxi driver start talking about the gold price?