Business
Gold price at an all-time high – why speculation rather than fear is behind the boom
The price of the precious metal is rising to a record level. However, according to Dekabank's chief economist Ulrich Kater, the hype is driven less by fear of crisis and more by geopolitical strategy and market dynamics.
The gold price is currently rushing from one record to the next. Many investors see this as a sign of growing uncertainty – but Ulrich Kater, chief economist at Dekabank, sees other causes. "The movement in the gold market is currently driven more by speculation than by fear," he says.
Central banks turn away from the dollar
The decisive trigger for the recent price rally, according to Kater, lies in the behavior of the central banks of the global South. Since the start of the Ukraine war in 2022, numerous countries have begun to shift their foreign exchange reserves from US dollars and instead purchase gold.
The reason is distrust: After the sanctions against Russia, which froze parts of Russia's foreign exchange reserves, gold is considered a safer alternative by many countries. However, since there is no serious competition to the dollar, more central bank money is flowing into the precious metal.
Private investors follow the trend
This wave of demand has also reached private investors. More and more people are buying gold—not out of fear of an economic crisis, but because they are afraid of being left out as prices rise. "The classic herd instinct is at play," says Kater. "Many are joining in because they have seen that the price is rising.
How long the boom will last is uncertain. A ceasefire in Ukraine or an easing of the geopolitical situation could quickly curb speculative purchases.
No crisis signal, but market movement
There can be no talk of real panic, says Kater. The stock markets are at a high level, bond yields remain stable, and volatility on the stock exchanges is lower than it has been in years. "This is not a crisis scenario – rather a market where some players are betting on a good story," says the economist.
Germany's Industry Losing Weight
While Gold Shines, the German Economy Loses Substance.
The weight of the automotive industry in the DAX has now shrunk to around five percent," explains Kater. At the same time, many corporations are shifting their production abroad – to places where energy is cheaper and permits are granted more quickly.
While gold benefits from global uncertainty, Germany is in the midst of an industrial upheaval. And the investors? They fluctuate between seeking safety and the allure of speculation.
