Gold price hits record highs in Japan, eyes on other currencies

(Kitco News) Gold priced in Japanese yen traded at record-high levels in Japan Wednesday, according to local prices and media reports.

The precious metal reached a new record high of 8,977 yen (USD $69.28) per gram, which was higher than the previous record of 8,969 yen (USD $69.22) per gram seen in April 2022, Jiji Press reported citing prices at a major precious metals seller Tanaka Kikinzoku Kogyo K.K.

Market analysts see recession fears and concerns around inflation as the key triggers driving demand.

Spot gold priced in yen per ounce is currently trading very close to record high levels seen in April 2022. In April of last year, spot gold priced in Japanese yen was at a record high of above 254,220 yen (USD $1,962) an ounce. On Wednesday, the highest level reached in spot prices was 252,600 yen (USD $1,950) an ounce.

In the meantime, the Japanese yen has been attracting some investor flows versus the U.S. dollar on recession fears and markets looking for the Federal Reserve to pause its historic monetary policy tightening cycle. The USD/JPY pair was last trading below the ¥130 level.

As gold rallies in most currencies, analysts also start to forecast record highs in the U.S. dollar.

“A significant global macroeconomic reset and eventual Federal Reserve pivot leans favorably toward the benchmark precious metal continuing doing what it typically does — outperforming most commodities,” said Bloomberg Intelligence senior macro strategist Mike McGlone on Wednesday. “Gold appears ripe to resume its enduring bull market.”

McGlone added that once gold breaches the $2,000 an ounce level, it might never look back.

“Gold may have a performance advantage at about half the per ounce price of the S&P 500 at the start of 2023, particularly if the U.S. enters a recession. The enduring history of booms that go bust when excessive liquidity is removed may set the stage for the metal to breach $2,000 an ounce resistance and never look back,” he noted.

Gold priced in U.S. dollars is seeing its best January since 2012, trading near nine-month highs and up more than 6% year-to-date.

“The precious metal certainly remains on a roll, securing five consecutive weekly gains, and could push higher if the fundamental drivers remain unchanged,” said FXTM senior research analyst Lukman Otunuga. “Gold bulls continue to draw confidence from U.S. recession fears and expectations around a less aggressive Federal Reserve.”

China’s biggest publicly traded brokerage Citic Securities said in a report published last week that it is looking at gold hitting record highs this year, citing central banks’ gold buying as one of the most reliable bullish signals.

“Purchases by global central banks are one of the most reliable indicators signaling gains in bullion prices,” said Ao Chong, an analyst at Citic Securities in Beijing. “Gold prices are expected to retain momentum and will be underpinned by easing expectations about the Fed’s interest-rate increases, the continuation of geopolitical conflicts and economic recession.”