Gold prices end the week vibrantly, heading towards 3,800 USD/ounce

The precious metal continues to attract great attention as confidence in the purchasing power of the USD and other currencies has declined. The US government is also at risk of having to close if the Congress does not pass the budget bill before September 30.

Even if the two parties reach an agreement, damage has occurred, because the US government will continue to pump large amounts of bonds into the market, increasing public debt.

Although rising interest rates are often at a disadvantage for gold, the question is: why is yield - especially long-term yields - still rising?

According to Neils Christensen - an analyst at Kitco News, as many investors and countries lose confidence in the USD, US Treasury bond yields will increase. In this context, gold is still considered the last global monetary asset. Therefore, the latest price increase comes as prices are close to record levels.

Prices are meaningless as gold is considered an assurance to preserve assets. As evidence, the world's largest gold ETF SPDR Gold Shares (NYSE: GLD) recorded a record one-day capital flow of more than 18 tons of gold last Friday.

Despite a sharp increase in inflows, global ETFs' gold holdings are still much lower than the 2020 record.

Although the gold market may be in a state of overbought goods, many experts emphasize that gold has not been priced too high thanks to strong demand from central banks.

China continues to play a key role. Commodity analysts at Societe Generale (France) said the People's Bank of China is buying more gold than the published figures, estimated at about 33 tons per month since 2022 (excluding the 6-month break last year).

At this rate, the Chinese central bank can continue to store gold for another 8 years if it wants to reserve it at the same level as developed countries.

Not only does gold benefit. Investors who think gold is too expensive are shifting to other precious metals. Silver has hit a four-year high for six consecutive weeks, currently standing above $46 an ounce, up more than 7% from last week.

This rally is expected to be just a start. Sprott experts say that growing industrial demand while supply is scarce could take silver on a trajectory similar to palladium - a metal that increased in price by more than 500% in the 2016 - 2021 period.