Uncertainty in Global Economy Boosts Gold Prices to Record Highs

KONTAN.CO.ID - JAKARTA. Global economic uncertainty has led to a surge in gold prices once again. Last weekend, the spot gold price reached its highest level in a year, while the production of Antam's precious metal gold hit an all-time high.

On Friday (17/3) last week, the spot gold price closed at US$ 1,989 per troy ounce. This position is up 5.74% from the price at the end of the previous week, which was US$ 1,880 per troy ounce.

Antam's gold bullion on Saturday (18/3) was valued at Rp 1,088,000 per gram. This price rose from Saturday (11/3), which was IDR 1,049,000 per gram, and IDR1,020,000 per gram on Wednesday (8/3).

According to Chief Analyst DCFX Futures Lukman Leong, gold demand is indeed increasing fundamentally. Since last year, central banks around the world have been actively purchasing gold. As a result, gold ownership reached a record high in 2022. In 2022, central bank demand reached 1,136 tons, up 152% from the previous year. The largest purchases were made by Turkey and China.

The rise in gold prices is also supported by high inflation rates. The significant increase in inflation has caused central banks to raise interest rates. This interest rate hike has had a negative impact on global economic growth. Additionally, there are signals of a banking crisis that will further suppress growth.

These conditions have caused investors to view gold as an attractive and safe asset to store their funds. As a result, gold is being sought after, driving up the price.

Thus, according to analysts, the current increase in gold prices is driven by concerns over the banking crisis, ranging from the collapse of Silicon Valley Bank (SVB) to Credit Suisse. All of this indicates the negative impact of The Fed's tight monetary policy.

Founder of Traderindo.com, Wahyu Tribowo Laksono, emphasized that the current situation will lead to salvation. Central banks may potentially print more money, making the currency lose its value. In such conditions, investors view gold as a safe haven asset.

Traditionally, Wahyu believes that gold will not lose its appeal. "Central banks, institutional investors, retail investors, the general public, all still consider gold an important asset for the long term, whether as a safe haven, inflation hedge, or investment asset," said Wahyu.

For Antam's gold bullion, Wahyu noted that its price tends to be better than global gold for two reasons. First, if the US dollar weakens, Antam's gold can still rise along with the increase in global gold. Second, if the US dollar strengthens and global gold weakens, Antam's gold will still rise because the rupiah weakens and Antam's gold becomes a hedge against the US dollar. "Antam's gold always rises every year, even to a new record," said Wahyu.

Wahyu predicts that Antam's gold price could reach IDR 1.1 million to IDR 1.2 million per gram. This is assuming the rupiah is at IDR 16,000 per US dollar.

Wahyu predicts that the spot gold price could reach US$ 2,300. Lukman's calculations indicate that the spot gold price could reach US$ 2,100-US$ 2,200.