IMF explains reasons of historic highs in gold and bitcoin prices

U.S., WASHINGTON, April 16. The International Monetary Fund (IMF) sees two drivers of the record-high gold prices, said Tobias Adrian, Financial Counselor and Director, Monetary and Capital Markets Department, IMF during a briefing on the Global Financial Stability Report held as part of the IMF Spring Meetings in Washington, Trend reports.

The gold spot price hit another record high, touching $2,313.50 per ounce on April 3.

“Indeed the gold price has reached historically high levels. We see two drivers here. One is certainly related to some reallocation of reserve asset managers towards commodities that include gold, and that could be one contributor to those valuations. The second one is of course, speculative behavior. Volatility in financial markets is fairly compressed. But of course, deeper economic uncertainty still remains fairly high, geopolitical uncertainty remains high. And gold is oftentimes viewed as a kind of hedge against those broader geopolitical risks,” he explained.

As for bitcoin, which set a new record of $73,750, with a market capitalization reaching $1.44 trillion on March 14, 2024, Adrian noted that it is difficult to pin down the fundamental drivers of Bitcoin valuations.

“Bitcoin has fluctuated, but also reached historical highs earlier this year. In terms of Bitcoin valuations. One technical factor that has played a role is the development of exchange traded products (ETP) that have been allowed in the US. When you look at it as allocations to bitcoin, since the beginning of the year, there has certainly been a substantial inflow in those investments through the ETPs,” he added.

The Spring Meetings of the International Monetary Fund and the World Bank Group kicked off on April 15.

The main ministerial meetings and events will take place April 17-19 with other events and activities taking place during the week, April 15-20.

At the heart of the gathering are meetings of the joint Development Committee and the IMF’s International Monetary and Financial Committee, which discuss progress on the work of the World Bank Group and the IMF.

The Spring Meetings bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organizations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.