Gold all aglow as it nears historic surge

GOLD was largely ho-hum last year amid a stellar rally across much of the commodities complex, but its narrative arc has shifted dramatically lately. With that, 2023 is shaping up to be a year when the precious metal could get its groove back.

The bullion has recaptured the US$2,000 an ounce glow at least twice in recent weeks (the last time it hit such levels was in March 2022), nudging close to record territory after sorely disappointing the bulls last year as rising interest rates and a stronger US dollar stole its shine. The metal’s steady ascent – it just capped its fourth straight week of gains – was led by safe haven flows in the wake of the banking duress following the collapse of America’s Silicon Valley Bank and Swiss giant Credit Suisse’s implosion.

Worries have since mounted over possible contagion risks and “credit crunch”, which could hurt global growth. These concerns, not without basis, have fuelled expectations that the US Federal Reserve is compelled to rethink its aggressive rate tightening trajectory aimed at tackling inflationary pressures. Indeed, the world’s largest central bank is walking an extremely tight rope between fighting inflation and averting a sharp economic slowdown and worsening the banking crisis.